AZZ (NYSE:AZZ) reported record fiscal 2027 first-quarter sales and raised its full-year outlook, citing strength in metal coatings demand, a ramping Precoat Metals facility in Washington, Missouri, and expectations for sustained infrastructure and electrification investment.
President and Chief Executive Officer Tom Ferguson said the company is “off to a strong start,” pointing to record sales in both operating segments, solid cash flow, a strong balance sheet, a higher dividend and increased guidance for the fiscal year. The quarter covered the period ended May 31, 2026.
Record Sales Led by Metal Coatings Growth
Chief Financial Officer Jason Crawford said first-quarter sales rose 6.3% year over year to $448.5 million. Metal Coatings sales increased 12.3%, driven by demand across construction, industrial and infrastructure markets. Precoat Metals sales rose 1.5%, supported by higher paint and input cost pass-throughs and the ramp-up of the Washington, Missouri facility, though partially offset by softer volumes in certain construction, HVAC and appliance markets.
Gross profit was $112.2 million, or 25% of sales, up 30 basis points from the prior year. Operating income rose to $77 million, or 17.2% of sales, a 70-basis-point improvement year over year. Crawford attributed the improvement to favorable mix, pricing discipline, operational execution and strong incremental margins on higher volumes.
GAAP net income was $52 million, while adjusted diluted earnings per share were $1.85, up 3.9% from the prior year. Consolidated adjusted EBITDA was $99.5 million, or 22.2% of sales.
Crawford also noted that year-over-year comparisons were affected by the prior-year quarter’s equity earnings from the AVAIL joint venture, which included a substantial gain tied to the divestiture of its Electrical Products Group. Current results reflect AZZ’s 40% interest in the remaining AVAIL business.
Guidance Raised as Infrastructure Demand Remains Strong
AZZ raised its fiscal 2027 outlook, now expecting sales of $1.8 billion to $1.85 billion, adjusted EBITDA of $375 million to $415 million and adjusted diluted EPS of $6.75 to $7.15. The company also expects to reduce debt by $130 million to $170 million during the fiscal year.
Ferguson said the updated guidance reflects sales momentum and operational resilience. In response to an analyst question, he said part of the confidence came from the Washington, Missouri facility reaching run-rate targets sooner than expected, along with pricing actions related to material inflation and zinc costs.
David Nark, chief marketing, communications and investor relations officer, said the company expanded its end-market sales disclosures into six primary categories: construction, industrial, infrastructure, HVAC and appliances, transportation, and container.
According to Nark, consolidated sales growth included:
- Construction sales up 3.9%, driven by data center and manufacturing-related projects.
- Industrial sales up 7.8%, supported by utility-scale power project demand.
- Container sales up 194%, primarily due to the Washington, Missouri ramp-up.
- Infrastructure sales essentially flat year over year.
- Transportation down 1.2% on lower commercial trailer activity.
- HVAC and appliances down 2.4% on lower residential new construction.
Nark said AZZ believes it is in the early stages of “a significant and sustained investment cycle,” driven by modernization of the electric grid, infrastructure, energy and industrial capacity needs.
Capacity Investments and Washington Facility Ramp
Ferguson said AZZ commissioned a new large kettle in North Texas, effectively doubling capacity at its Crowley, Texas location. He said the investment is designed to meet growing regional demand for hot-dip galvanizing and is aligned with expected utility capital spending in the Southern U.S.
At Precoat Metals, Ferguson said the Washington, Missouri facility continues to ramp as planned. Crawford said the facility’s contracted capacity has been discussed in the range of $50 million to $60 million in annual sales, and that the plant is approaching those levels on a run-rate basis. He said AZZ expects the facility to reach full run-rate metrics with its contracted customer by the end of the year, while also beginning to commercialize the remaining 25% of capacity.
Ferguson also highlighted a “de-verticalization” arrangement in which a vertically integrated manufacturer divested a non-core galvanizing operation to AZZ. AZZ acquired the customer’s galvanizing kettle and zinc and secured a long-term service agreement. Ferguson described the model as a potential blueprint for future partnerships with customers that own galvanizing assets but do not view them as core operations.
Balance Sheet, Dividend and Capital Allocation
AZZ generated $37.1 million in operating cash flow during the quarter. Net leverage was 1.4 times, and capital expenditures totaled $18.7 million. Crawford said the company continues to focus capital spending on high-return organic investments.
The company increased its quarterly cash dividend to $0.24 per share from $0.20, a 20% increase. Crawford said AZZ also has $133.2 million remaining under its share repurchase authorization, though it did not repurchase shares during the first quarter.
In closing remarks, Ferguson said that if the stock continues to trade in its recent range, the company would anticipate being in the market to buy back shares.
Management Says Project Demand Remains Resilient
During the question-and-answer session, Ferguson said Metal Coatings markets remain robust and that AZZ has not seen significant project delays tied to interest rates or energy costs. He said customers continue to move forward with work tied to electrical infrastructure and data centers, adding that “the majority” of AZZ plants have had at least one data center project ongoing recently.
On Precoat Metals, Ferguson said tariffs and substrate availability have affected customers, though conditions appear to have stabilized. Crawford said supply constraints have influenced customer decisions, but that easing availability and potential imports could support more business flowing through Precoat.
Ferguson also said AZZ is evaluating acquisition opportunities and expects to announce a deal later in the month. He described the potential transaction as a one-off galvanizing acquisition that had been under due diligence, while adding that AZZ is also reviewing bolt-on opportunities in Precoat Metals.
Asked about greenfield galvanizing opportunities, Ferguson said AZZ typically looks for anchor customers rather than take-or-pay agreements. He estimated that a greenfield galvanizing facility could cost about $35 million to $40 million, including real estate, with an approximately 18-month buildout and ramp-up.
About AZZ (NYSE:AZZ)
AZZ Inc, incorporated in 1956 and headquartered in Fort Worth, Texas, is a leading provider of galvanizing and metal finishing solutions alongside electrical equipment and services. The company supports a diverse range of industries—such as energy, infrastructure, heavy equipment and general industrial markets—by delivering corrosion protection and high-performance electrical solutions designed for demanding environments.
AZZ operates two primary business segments. The Global Coatings & Services segment offers hot-dip galvanizing, metal finishing, painting, powder coating and related value-added services to steel fabricators and original equipment manufacturers.
