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AZZ INC (AZZ) Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 delivered record adjusted results: Adjusted EBITDA $106.4M (25.2% margin) and adjusted diluted EPS $1.78, driven by higher galvanized steel volume and productivity; GAAP EPS was $5.66 due to a $165.8M gain from the AVAIL JV distribution .
  • Versus S&P Global consensus, AZZ posted an EPS beat (actual $1.78 vs $1.59*), with a revenue miss ($421.96M vs $435.91M*); S&P EBITDA actual ($91.38M*) missed EBITDA consensus ($98.37M*), while company-reported Adjusted EBITDA was $106.4M .
  • Management raised FY26 adjusted EPS guidance to $5.75–$6.25 (from $5.50–$6.10), maintained sales ($$1.625–$1.725B) and adjusted EBITDA ($$360–$400M), citing lower interest expense and strong operational execution .
  • Balance sheet catalysts: $285.4M debt paydown, net leverage to 1.7x, and a 17.6% dividend increase to $0.20/share; bolt-on Canton Galvanizing acquisition expands Midwest capacity .

What Went Well and What Went Wrong

What Went Well

  • Metal Coatings segment margin expanded to 32.9% on improved zinc utilization and higher volumes; CEO: “We are off to a great start... Adjusted EBITDA margin of 32.9%” .
  • Precoat Metals margin improved to 20.7% with favorable mix and operational performance; customer shipments rose as inventories were drawn down .
  • Cash generation and deleveraging: $314.8M operating cash (includes $273.2M AVAIL distribution), $285.4M debt reduction; net leverage 1.7x .

What Went Wrong

  • Revenue missed consensus ($421.96M vs $435.91M*), and S&P’s EBITDA actual ($91.38M*) missed consensus ($98.37M*), notwithstanding company-reported Adjusted EBITDA of $106.4M .
  • Precoat volumes slightly lower in certain end markets (construction, HVAC, appliance); tariff uncertainty weighed on outlook caution .
  • Restructuring charges ($3.8M) and ramp of new Washington, MO coil line created margin drag in the quarter .

Financial Results

MetricQ1 2025 (YoY base)Q4 2025 (Prior Q)Q1 2026 (Current)Q1 2026 Consensus
Revenues ($M)$413.21 $351.88 $421.96 $435.91*
Gross Margin ($M)$102.67 $78.72 $104.13 —
Gross Margin (%)24.8% 22.4% 24.7% —
Operating Income ($M)$69.75 $40.43 $69.55 —
Adjusted EBITDA ($M)$94.10 $71.18 $106.41 $98.37*
Adjusted EBITDA Margin (%)22.8% 20.2% 25.2% —
GAAP Diluted EPS ($)$(1.38) $0.67 $5.66 —
Adjusted Diluted EPS ($)$1.46 $0.98 $1.78 $1.59*
  • Significant beats/misses: EPS beat vs consensus; revenue miss; S&P EBITDA miss relative to consensus while company-reported Adjusted EBITDA exceeded the S&P figure .
  • Estimates marked with * are Values retrieved from S&P Global.

Segment Performance

SegmentQ1 2025 Sales ($M)Q4 2025 Sales ($M)Q1 2026 Sales ($M)Q1 2025 Adj. EBITDA ($M)Q4 2025 Adj. EBITDA ($M)Q1 2026 Adj. EBITDA ($M)
Metal Coatings$176.65 $148.36 $187.22 $54.65 $43.25 $61.52
Precoat Metals$236.56 $203.52 $234.75 $47.69 $36.18 $48.48
Infrastructure Solutions—$3.49 —$3.80 $3.49 $7.62

Key KPIs

KPIQ1 2025Q4 2025Q1 2026
Operating Cash Flow ($M)$71.94 $249.91 (FY) $314.78 (incl. $273.2M AVAIL)
Debt Paid Down ($M)—$110.0 (FY) $285.4
Net Leverage (x)2.6x (Q3 TTM) 2.5x (FY TTM) 1.7x (TTM)
Capex ($M)$27.38 $115.9 (FY) $20.9
Dividend per Share ($)$0.17 $0.17 $0.17 (paid) ; increased to $0.20 post-Q1

Guidance Changes

MetricPeriodPrevious Guidance (Feb 5, 2025)Current Guidance (Jul 9, 2025)Change
SalesFY2026$1.625–$1.725B $1.625–$1.725B Maintained
Adjusted EBITDAFY2026$360–$400M $360–$400M Maintained
Adjusted Diluted EPSFY2026$5.50–$6.10 $5.75–$6.25 Raised
Segment EBITDA Margin (Metal Coatings)FY202627–32% 27–32% Maintained
Segment EBITDA Margin (Precoat Metals)FY202617–22% 17–22% Maintained
Effective Tax RateFY202625% 25% Maintained
Interest Expense AssumptionFY2026$60–$70M “Lower interest expense” qualitative Lower (qualitative)
Quarterly DividendCY2025$0.17/share $0.20/share effective Q1 payout authorized Raised

Earnings Call Themes & Trends

TopicQ3 2025 (Nov 30, 2024)Q4 2025 (Feb 28, 2025)Q1 2026 (May 31, 2025)Trend
Operational efficiency (zinc utilization/DGS)Zinc utilization improved; Metal Coatings margin 31.5% Weather constrained volumes; margins resilient Near “theoretical” zinc efficiency; DGS platform scaling across plants Improving
Tariffs/macro (prepaint imports)Stable; guidance narrowed/raised Weather/tariff uncertainty constrained volumes Imports built ahead of tariffs; fell 38% YoY in May; tariff tailwinds expected Tailwind developing
Demand by end-market (construction/electrical/data centers)Volume growth across coil-coated segments Weather impacted demand; continued sector strength Infrastructure and data center demand strong; electrical T&D positive Strengthening
Capital allocation (deleveraging, buybacks, dividend)Repriced TLB; net leverage 2.6x Net leverage ≤2.5x; record FY cash Leverage 1.7x; buybacks planned; dividend to $0.20; bolt-on M&A More offensive
Washington, MO plant rampOn budget and schedule Completed; drag in Q1 anticipated Shipped first qualification orders; positive gross margins expected 2H Ramping as planned
Legal/regulatoryLegal accruals in prior quarter Legal write-off impacted results Streamlined permitting noted; “big bill” adjustments cited Noise fading

Management Commentary

  • “We reported record high sales, adjusted EBITDA, and EPS... driven by infrastructure-related demand... industry-leading adjusted EBITDA margins of 32.9% for metal coatings and 20.7% for Precoat Metals.” — Tom Ferguson, CEO .
  • “Consolidated adjusted EBITDA... 25.2%... supported by higher EBITDA margins... Additionally, our newly commissioned aluminum coating facility in Washington, Missouri, shipped its first qualification orders.” — CEO .
  • “We received a cash distribution of $273.2M [from AVAIL]... recorded $165.8M... excess distribution... Interest expense down $4.2M YoY.” — CFO .
  • “We believe AZZ continues to be undervalued... reiterating sales and EBITDA guidance and moving up EPS guidance to $5.75–$6.25.” — CEO .

Q&A Highlights

  • Volume normalization after weather: Half of 1Q metal coatings volume recovery from Q4, half organic growth .
  • Zinc efficiency drivers: DGS digital tools, training, leadership; approaching theoretical zinc efficiency levels .
  • Tariff dynamics: Prepaint imports fell 50% in Apr and 38% in May; expected sourcing shift to domestic steel benefits Precoat .
  • Capital allocation: Comfortably below 2x leverage; buybacks under $100M program (≈$53.2M remaining) and more bolt-ons targeted (Canton closed) .
  • Guidance calibration: EPS raised while EBITDA held given AVAIL EBITDA loss offset by interest savings; tariff uncertainty tempers sales guidance .
  • Washington, MO ramp: Test qualifications in Q1; contribution builds in Q3; near-normal run rate by Q4 .

Estimates Context

MetricQ1 2026 ActualQ1 2026 ConsensusQ2 2026 ConsensusQ3 2026 Consensus
Primary EPS ($)$1.78 1.59286*1.574*1.446*
Revenue ($M)$421.96 435.91*426.15*414.79*
EBITDA ($M)91.38*98.37*95.01*87.72*
  • Q1 outcome: EPS beat, revenue miss; S&P EBITDA actual below consensus while company’s Adjusted EBITDA was $106.4M (non-GAAP) .
  • Estimates marked with * are Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat: Adjusted EPS $1.78 materially above consensus; margin expansion to 25.2% despite ramp costs — a positive for near-term sentiment .
  • Guidance higher on EPS only: Sales/EBITDA ranges maintained; EPS raised to $5.75–$6.25, implying levers from interest savings, mix, and operational excellence .
  • Deleveraging narrative: Net leverage cut to 1.7x and $285.4M debt repaid — strengthens optionality for buybacks and bolt-ons; dividend increased to $0.20 .
  • Segment resilience: Metal Coatings leading with 32.9% margins on zinc efficiency/DGS; Precoat margins holding at 20.7% amid tariff realignment and inventory drawdowns .
  • Tariff tailwinds forming: Abrupt decline in prepaint imports supports domestic coating volumes over coming quarters; watch Q3/Q4 ramp in Washington, MO .
  • Watch for execution: Monitor Precoat volume normalization, Washington ramp to positive gross margins in 2H, and progress on bolt-ons in metal coatings .
  • Near-term trading setup: EPS beat + raised EPS guide + deleveraging are likely stock-positive catalysts; any confirmation of tariff-driven demand and Washington ramp could extend momentum .

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