AZZ INC (AZZ) Q2 2026 Earnings Summary

Executive Summary

Q2 FY26 delivered mixed results: revenue $417.3M (+2% YoY), adjusted EBITDA $88.7M (21.3% margin), and adjusted EPS $1.55 (+13% YoY), while GAAP EPS benefited from AVAIL JV accounting gains to $2.95 .
Versus S&P Global consensus, AZZ modestly missed on adjusted EPS ($1.55 vs $1.57*), revenue ($417.3M vs $426.2M*), and EBITDA ($88.7M vs $95.0M*); guidance for FY26 was maintained, reinforcing management’s confidence despite Precoat demand headwinds . Values retrieved from S&P Global.
Segment performance diverged: Metal Coatings sales +10.8% with 30.8% margin on infrastructure demand; Precoat Metals sales −4.3% with 20.2% margin amid softer construction/HVAC/appliance end markets and tariff-induced uncertainty .
Balance sheet strengthened: net leverage at 1.7x, interest expense improved via Term Loan B repricing (−75 bps) and AR securitization (SOFR+95 bps), with $58.4M operating cash flow in Q2 and continued debt paydown .
Near-term stock catalysts: Washington, MO aluminum coil facility ramp (Q3–Q4), continued infrastructure tailwinds (IIJA), active bolt-on M&A pipeline, and buyback program activity indicated (~$20M 10b5-1) .

What Went Well and What Went Wrong

What Went Well

Metal Coatings strength: sales $190.0M (+10.8% YoY) with 30.8% adjusted EBITDA margin driven by infrastructure projects (construction, industrial, T&D) . “Metal Coatings delivered strong, double-digit sales gains…supported by growth in construction, industrial, and electrical transmission and distribution end-markets.” — CEO Tom Ferguson .
Balance sheet/financing actions: net leverage 1.7x; repriced Term Loan B (−75 bps); launched AR securitization (SOFR+95 bps) to lower interest costs; proceeds used to pay down debt .
Washington, MO facility ramp: production ahead of plan; contribution improving into H2; container/beverage demand robust amid plastic-to-aluminum shift .

What Went Wrong

Precoat Metals demand: sales $227.3M (−4.3% YoY); margins −90 bps YoY to 20.2% on lower volumes; tariff uncertainty dampened non-infrastructure projects and bare galvalume imports (down ~50%), offsetting gains from reduced pre-painted imports .
Consolidated margin compression: gross margin 24.3% vs 25.3% prior year; adjusted EBITDA down YoY to $88.7M (21.3% margin) due partly to seasonal weakness in AVAIL’s welding business and equity adjustments .
Modest estimate misses: adjusted EPS, revenue, and EBITDA came in below consensus despite operational progress, highlighting softer end markets and mix headwinds in Precoat* (see Estimates Context). Values retrieved from S&P Global.

Financial Results

Metric	Q4 FY2025 (oldest)	Q1 FY2026	Q2 FY2026 (newest)
Revenue ($USD Millions)	$351.9	$422.0	$417.3
Operating Income ($USD Millions)	$40.4	$69.5	$68.5
Adjusted EBITDA ($USD Millions)	$71.2	$106.4	$88.7
GAAP Diluted EPS ($USD)	$0.67	$5.66	$2.95
Adjusted Diluted EPS ($USD)	$0.98	$1.78	$1.55

Segment breakdown across recent quarters:

Segment Metric	Q4 FY2025 (oldest)	Q1 FY2026	Q2 FY2026 (newest)
Metal Coatings Sales ($M)	$148.4	$187.2	$190.0
Metal Coatings Adj. EBITDA ($M)	$43.2	$61.5	$58.5
Metal Coatings Margin (%)	29.2%	32.9%	30.8%
Precoat Metals Sales ($M)	$203.5	$234.7	$227.3
Precoat Metals Adj. EBITDA ($M)	$36.2	$48.5	$45.9
Precoat Metals Margin (%)	17.8%	20.7%	20.2%

KPIs and balance sheet highlights:

KPI	Q4 FY2025 (oldest)	Q1 FY2026	Q2 FY2026 (newest)
Gross Margin ($M)	$78.7	$104.1	$101.3
Gross Margin (%)	—	24.7%	24.3%
Interest Expense ($M)	$17.4	$18.6	$13.7
Net Leverage (TTM)	2.5x	1.7x	1.7x
Cash from Operations ($M)	—	$314.8 (incl. AVAIL dist.)	$58.4

Estimate vs actual (Q2 FY2026):

Metric	Consensus*	Actual
Adjusted EPS ($)	1.574*	1.55
Revenue ($M)	426.2*	417.3
EBITDA ($M)	95.0*	88.7
EPS # of Estimates	10*	—
Revenue # of Estimates	9*	—

Values retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales ($B)	FY2026	$1.625–$1.725	$1.625–$1.725	Maintained
Adjusted EBITDA ($M)	FY2026	$360–$400	$360–$400 (lower half expected)	Maintained (bias lower half)
Adjusted Diluted EPS ($)	FY2026	$5.75–$6.25	$5.75–$6.25	Maintained
Segment Margin Range (Metal Coatings)	FY2026	27–32%	27–32%	Maintained
Segment Margin Range (Precoat Metals)	FY2026	17–22%	17–22%	Maintained
Effective Tax Rate (%)	FY2026	25%	24%	Lowered
Quarterly Dividend ($/share)	Q1→Q2 FY2026	$0.17 (Q1)	$0.20 (Q2)	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY25, Q1 FY26)	Current Period (Q2 FY26)	Trend
AI/Technology & Systems	DGS platform and digital tools highlighted; Oracle migration underway	Continuing Oracle migration; exploring AI; integrating Ohio facility onto DGS	Increasing focus
Supply chain/tariffs	Tariff uncertainty raised caution; pre-painted imports fell YoY	Tariffs reduced pre-painted imports (share gains), but bare galvalume down ~50%; customer hesitation on non-infrastructure	Mixed; still a headwind
Macro/IIJA	Infrastructure demand strong (data centers, T&D, solar)	73% DOT IIJA funds committed; positive tailwinds; public projects less rate-sensitive	Supportive
Product performance (Washington, MO)	Qualification orders started; margin drag in H1	Ramp ahead of plan; 50%+ capacity by Q4; positive contribution expected	Improving
Financing & interest	Debt paydown, leverage to ~1.7x	AR securitization (SOFR+95 bps), Term Loan B repricing (−75 bps); interest expense down; further savings expected	Improving
AVAIL JV	FY25 equity income; distribution in Q1, future equity earnings ~0	Forecasting ~zero equity earnings; seasonal WSI headwinds; potential slight negative in Q3	Neutral to slight drag
Shareholder returns	Dividend increased; buybacks discussed	10b5-1 plan targeting ~$20M buybacks near term	Increasing

Management Commentary

“Second quarter sales expanded to $417.3 million…Adjusted diluted EPS of $1.55, up 13.1%. Metal Coatings delivered strong, double-digit sales gains…Precoat Metals’ sales results were pressured…” — Tom Ferguson, CEO .
“We introduced an Accounts Receivable securitization…repriced our Term Loan B, achieving a 75-basis point reduction…maintain a net debt leverage of 1.7x…$58.4 million cash from operations” — Ferguson .
“AR facility…limit of $150 million…rate of one-month SOFR + 95 bps…expected annual interest savings of $1.4 million vs term loan; proceeds used to pay down debt” — Jason Crawford, CFO .
“Washington, Missouri facility…ramp ahead of plan…50% capacity through Q3 into Q4…start to pop in Q4” — CFO .
“Adjusted EBITDA will be within the lower half of the range of $360–$400 million due to lack of AVAIL equity income…Adjusted EPS range $5.75–$6.25” — CEO .

Q&A Highlights

Precoat market share gains from reduced pre-painted imports (~3–4% share pick-up), but offset by ~9–10% market decline; margins maintained without aggressive discounting .
Washington facility: ~$2M margin drag in H1; ramp to ~50% capacity by Q3/Q4; ahead of plan; substrate availability unaffected by Oswego incident .
Tariffs: pre-painted imports down 23% YTD; bare galvalume down ~50%; uncertainty delaying non-infrastructure projects; infrastructure solar/T&D accelerating .
AVAIL outlook: model ~zero equity earnings; risk of slight negative in Q3; monetization of lighting/China JV possible in H2 .
Zinc pricing: gradual LME increase manageable; 6–8 months zinc in kettles minimizes near-term margin impact .
Capital allocation: bolt-on M&A pipeline (~nine opportunities); Canton contributed ~~$2M revenue in Q2 with positive margin; buybacks (~~$20M) planned .

Estimates Context

Q2 FY26 vs consensus: adjusted EPS $1.55 vs $1.57*, revenue $417.3M vs $426.2M*, EBITDA $88.7M vs $95.0M*; modest, broad-based misses consistent with Precoat volume softness and mix . Values retrieved from S&P Global.
Forward modeling implications: maintain FY26 guidance but bias adjusted EBITDA to lower half given AVAIL equity income absence and Precoat’s mixed demand; interest savings and Washington ramp provide offsets .

Key Takeaways for Investors

Infrastructure tailwinds underpin Metal Coatings; expect continued high volumes in solar/T&D/data centers with margins holding ~30%+ near term .
Precoat’s near-term headwinds persist (construction/HVAC/appliance softness, tariff uncertainty), but share gains and Washington ramp should support H2 margin resilience .
Balance sheet and interest expense trend are positive catalysts: AR securitization, Term Loan B repricing, and ongoing debt reduction drive EPS leverage .
FY26 guidance reaffirmed (sales $1.625–$1.725B, adj. EBITDA $360–$400M, adj. EPS $5.75–$6.25) with tax rate assumption lowered to 24%; execution path clear despite macro noise .
Watch AVAIL JV impact: modeling ~zero equity income with potential Q3 slight negative; not a thesis driver but can affect quarterly noise .
Near-term trading setup: modest estimate misses vs consensus and unchanged guidance likely temper reaction; H2 catalysts include Washington ramp, buybacks (~$20M), and potential bolt-on M&A .
Medium-term thesis: durable infrastructure exposure, network/technology advantages (DGS/Oracle), disciplined capital allocation and margin discipline support multi-year cash generation and deleveraging .

Notes: All quantitative and qualitative claims are sourced from AZZ’s Q2 FY26 8-K and press releases, and Q2/Q1 earnings call transcripts as cited above. Estimate values marked with asterisks are retrieved from S&P Global.