AZZ INC (AZZ) Q4 2025 Earnings Summary

Executive Summary

Q4 FY2025 revenue of $351.9M fell 4.0% YoY and missed S&P Global consensus ($367.8M), but adjusted EPS of $0.98 grew 5.4% YoY and modestly beat consensus ($0.976). Weather caused ~200 lost production days and ~$8–$12M revenue shortfall, partially recovered in March–April, and margins held due to operational improvements . Values retrieved from S&P Global.*
Consolidated adjusted EBITDA was $71.2M (20.2% margin), flat YoY on margin despite lower volumes; segment EBITDA margins: Metal Coatings 29.2% (+60bps YoY) and Precoat Metals 17.8% (flat YoY) .
FY2026 guidance reiterated at Q4 (Sales $1.625–$1.725B, Adj EBITDA $360–$400M, Adj EPS $5.50–$6.10), then raised in Q1 FY2026 to Adj EPS $5.75–$6.25; debt repricing and AVAIL JV proceeds drove interest expense reductions and net leverage to 1.7x in Q1 .
Near-term catalysts: Washington, MO aluminum coil-coating facility ramp (mid-year margin uplift), bolt-on galvanizing M&A in 1H, price actions amid tariff-driven input inflation, and accelerated deleveraging supported by ~$273M JV distribution .

What Went Well and What Went Wrong

What Went Well

Record full-year sales ($1.58B) and profitability; FY25 adjusted EPS $5.20 and adjusted EBITDA $347.9M, with strong segment margins (Metal Coatings 30.9%, Precoat 19.6%) .
Operational execution preserved margins in Q4 despite lower volumes: consolidated gross margin improved vs prior-year Q4 (22.4% of sales), and operating income was 11.5% of sales due to operational improvements .
Cash generation and deleveraging: FY25 cash from operations $249.9M, debt reduced $110M (net leverage 2.5x); Q1 FY26 JV proceeds enabled $285.4M further debt reduction and net leverage 1.7x .

Management quote: “We delivered record full year results and made significant progress on our growth initiatives... despite navigating significant weather impacts in the fourth quarter” .

What Went Wrong

Weather-driven demand/production impact: Q4 sales down 4.0% YoY, with ~200 lost production days and ~$8–$12M directly attributable revenue loss in Metal Coatings; customers in some cases delayed deliveries at Precoat .
Q4 revenue missed consensus and adjusted EBITDA modestly under consensus; Precoat volumes seasonally weaker with lower end-market demand in transportation . Values retrieved from S&P Global.*
Legal settlement/accrual ($6.5M) related to AIS litigation hit Q4 non-GAAP adjustments (Corporate), indicating residual non-operating headwinds retained from AIS sale .

Financial Results

Consolidated Quarterly Comparison

Metric	Q2 FY2025	Q3 FY2025	Q4 FY2025
Revenue ($USD Millions)	$409.0	$403.7	$351.9
GAAP Diluted EPS ($)	$1.18	$1.12	$0.67
Adjusted Diluted EPS ($)	$1.37	$1.39	$0.98
Adjusted EBITDA ($USD Millions)	$91.9	$90.7	$71.2
EBITDA Margin %	22.5%	22.5%	20.2%
Operating Income ($USD Millions)	$67.6	$58.5	$40.4
Operating Margin %	16.5% (calc from )	14.5% (calc from )	11.5%

Segment Breakdown (Sales and EBITDA)

Segment	Q2 FY2025 Sales ($M)	Q3 FY2025 Sales ($M)	Q4 FY2025 Sales ($M)	Q2 FY2025 Adj EBITDA ($M)	Q3 FY2025 Adj EBITDA ($M)	Q4 FY2025 Adj EBITDA ($M)	EBITDA Margin % (Q2/Q3/Q4)
Metal Coatings	$171.5	$168.6	$148.4	$54.4	$53.1	$43.2	31.7% / 31.5% / 29.2%
Precoat Metals	$237.5	$235.1	$203.5	$50.2	$45.0	$36.2	21.1% / 19.1% / 17.8%

KPIs and Balance Sheet

KPI	Q2 FY2025	Q3 FY2025	FY2025	Q1 FY2026
Cash from Operations ($M)	$119.4 (6M)	$185.6 (9M)	$249.9	$314.8 incl. $273.2M JV distribution
Net Leverage Ratio	2.7x	2.6x	2.5x	1.7x
Debt Reduction ($M)	$45 (YTD)	$80 (YTD)	$110	$285.4 (quarter)
Dividend per Share ($)	$0.17	$0.17	$0.17 (Q4 cash paid total FY $23.1M)	$0.17; increased to $0.20 subsequently

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–$400	Maintained
Adjusted Diluted EPS ($)	FY2026	$5.50–$6.10	$5.75–$6.25	Raised
Capex ($M)	FY2026	$60–$80	$60–$80	Maintained
Net Leverage (x)	FY2026 target	1.5–2.5	1.7 actual in Q1 FY26	Improved actual
Debt Paydown ($M)	FY2026	$140–$180	“> $165” reiterated; plus AVAIL proceeds to accelerate	Raised minimum
Dividend ($)	Ongoing	$0.17	$0.20 increase announced post-Q1	Raised
Interest Expense	FY2026	$60–$70	Lower expected via revolver repricing (margin cut by 100bps)	Lower cost of debt

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 FY25 and Q3 FY25)	Current Period (Q4 FY25)	Trend
Weather impact on volumes	Not highlighted; seasonal strength; Washington facility on budget . Q3 execution strong; zinc productivity helped margins .	~200 lost production days; ~$8–$12M Metal Coatings revenue hit; recovery in March–April	Temporary headwind; rapid recovery in Q1
Tariffs and input costs	FY25 guidance noted tax/interest, limited tariff commentary .	Zinc exempt from tariffs; paint availability intact; some secondary inputs inflated; AZZ pushing price	Manageable; pricing action offsets
Washington, MO plant	On budget/schedule; capex progressing .	Commercial shipments begun; ramp expected to lift Precoat margins; full capacity ~ $60M run-rate potential	Positive ramp; 2H margin uplift
AVAIL JV and cash proceeds	Equity earnings included in FY25 guidance .	$273.2M distribution post EPG sale; EPS guidance excludes JV going forward; deleveraging focus	Balance sheet strengthening
Deleveraging and interest	Term Loan B repricing -75bps (Sep) .	Revolver repriced (-100bps margin); net leverage 2.5x → 1.7x; potential $300M debt reduction realistic	Accelerating
M&A pipeline	Active; disciplined approach .	Expect bolt-on galvanizing in Q1; pipeline robust; US/Canada focus	Executable near-term
End-market demand	Construction/HVAC/transport supported volumes .	Construction season delayed by weather; demand positive; domestic sourcing tailwind vs imports	Improving into Q1

Management Commentary

CEO on FY25 performance: “We delivered record full year results... record results in both Metal Coatings... 30.9% EBITDA margin, while Precoat Metals... 19.6% EBITDA margin” .
CFO on Q4 margin resilience: “Despite the lower volumes in the quarter, gross margins improved to 22.4%... operating income... 11.5% of sales... interest expense... down $7M YoY” .
CEO on weather recovery and outlook: “In April alone, we’ve recovered the shortfall... very strong first quarter on the Metal Coatings side” .
CFO on Washington ramp: “Facility has started to ship commercial production... will continue to ramp volumes through the fiscal year” .
CEO reiterating FY26 guidance and priorities: “We anticipate delivering above-market growth... sticking to disciplined capital allocation” .

Q&A Highlights

Weather impact quantified: ~$8–$12M lost revenue for Metal Coatings; nearly all recovered in March–April; ~200 lost production days concentrated mid-Jan to Feb .
AVAIL JV guidance effect: EPS impact viewed as insignificant post-sale; deleveraging offsets reduced equity income .
Debt reduction path: ~$300M additional debt reduction seen as realistic; buybacks to offset equity compensation dilution .
FY26 capex split: Roughly 50/50 between segments; $60–$80M total, with some Washington carryover .
Tariffs: Zinc exempt; secondary inputs seeing inflation; AZZ pushing price to maintain margins .
Domestic sourcing tailwind: Prepainted imports (~10% of volume, ~800k tons) expected to shift domestic, benefiting AZZ .

Estimates Context

AZZ compared to S&P Global Wall Street consensus:

Metric	Q4 FY2025 Estimate*	Q4 FY2025 Actual	FY2025 Estimate*	FY2025 Actual	Q1 FY2026 Estimate*	Q1 FY2026 Actual	FY2026 Estimate*
Revenue ($USD Millions)	$367.8*	$351.9	$1,596.1*	$1,577.7	$435.9*	$422.0	$1,649.6*
Primary EPS ($)	$0.976*	$0.98	$5.175*	$5.20	$1.593*	$1.78	$6.044*
EBITDA ($USD Millions)	$73.34*	$71.18	$351.19*	$347.86	$98.37*	$106.41	$366.70*
Target Price (USD)	$125.56*	—	$125.56*	—	$125.56*	—	$125.56*

Q4 FY25: Revenue miss; adjusted EPS beat; EBITDA slight miss. Q1 FY26: Revenue miss; adjusted EPS and EBITDA beats . Values retrieved from S&P Global.*

Key Takeaways for Investors

Weather a transitory headwind; volumes rebounded early in Q1, supporting near-term upside in Metal Coatings volumes and margins .
Price discipline amid tariff-driven input inflation and zinc exemption should sustain segment margins; management is actively pushing pricing where needed .
Washington, MO ramp is a 2H catalyst for Precoat mix/margins; capacity at full run-rate (~$60M revenue potential) supports FY26 margin progression .
Balance sheet inflection: JV cash and revolver repricing lowered net leverage to 1.7x and interest costs; room for accelerated deleveraging and selective buybacks/M&A .
FY26 EPS guidance raised ($5.75–$6.25) post-Q1; execution on bolt-on M&A and Washington ramp are key to upside vs the midpoint .
Near-term trading lens: Watch for Q1 confirmation of margin resilience and Metal Coatings volumes; estimate revisions likely positive on EPS/EBITDA post Q1 beat (vs consensus) . Values retrieved from S&P Global.*
Medium-term thesis: Market share gains across infrastructure-linked end markets, durable segment economics, and disciplined capital allocation underpin multi-year cash generation and returns .

S&P Global disclaimer: Values retrieved from S&P Global.*