AZZ Posts Robust Q2 with Net Income Up 152%, Metal Coatings Segment Leads Growth
Net Income Jumps as Metal Coatings Powers Expansion
AZZ Inc. delivered a solid second quarter for fiscal 2026, driven by double-digit growth in Metal Coatings and disciplined balance sheet management. For the period ending August 31, 2025, net income soared 152.3% year-over-year to $89.35 million, while adjusted net income rose 13.8% to $46.93 million. Total sales rose 2.0% to $417.3 million, led by a standout 10.8% increase in Metal Coatings revenue, offsetting a 4.3% drop in Precoat Metals due to softening in construction, HVAC, and appliance markets.
Metal Coatings Margins Hold Steady Despite Mix Shift
Metal Coatings proved to be AZZ's growth engine, with second quarter segment sales climbing to $190 million and Adjusted EBITDA hitting $58.54 million—an EBITDA margin of 30.8%. This represents only a slight dip from last year (down 90 basis points) as increased demand from infrastructure-related projects in construction, industrial, and utilities offset the impact of a heavier mix of electrical and solar projects.
| Segment | Sales ($M) | Change YoY | Adjusted EBITDA ($M) | EBITDA Margin |
|---|---|---|---|---|
| Metal Coatings | 190.00 | +10.8% | 58.54 | 30.8% |
| Precoat Metals | 227.29 | -4.3% | 45.95 | 20.2% |
Cash Flow and Debt Metrics Signal Financial Discipline
The company reported $58.4 million in operating cash flow for the quarter (up 23% year-over-year), fueling a $30.1 million galvanizing facility acquisition in Ohio and $0.20 per share cash dividend to shareholders. At quarter's end, AZZ had reduced its net leverage to 1.7x trailing twelve months Adjusted EBITDA—significantly below last year’s 2.5x—while paying down $290.4 million in debt over the past six months. Liquidity was further enhanced through the launch of an Accounts Receivable securitization program and a successful repricing of its Term Loan B, lowering interest costs.
Precoat Metals Faces Headwinds, but Outlook Remains Firm
While Precoat Metals saw a year-over-year sales decline to $227.29 million due to weaker demand in key end-markets, the segment maintained a respectable 20.2% Adjusted EBITDA margin. The margin declined by 90 basis points versus last year, but cost controls and ongoing management focus have kept segment profitability relatively healthy given the environment.
Full-Year Guidance Maintained, Highlighting Confidence
AZZ reaffirmed its fiscal 2026 guidance, targeting full-year sales between $1.625 and $1.725 billion, Adjusted EBITDA of $360 to $400 million, and adjusted diluted EPS of $5.75 to $6.25. Segment EBITDA margins are expected in the 27–32% range for Metal Coatings and 17–22% for Precoat Metals, excluding further M&A activity and equity income from the AVAIL JV.
| FY2026 Guidance | Range |
|---|---|
| Sales | $1.625–$1.725B |
| Adjusted EBITDA | $360–$400M |
| Adjusted Diluted EPS | $5.75–$6.25 |
| Net Leverage | 1.7x |
Key Takeaways: AZZ Balances Growth, Returns, and Discipline
With strong Metal Coatings momentum, a conservative capital structure, and maintained guidance, AZZ’s second quarter performance offers confidence for investors seeking growth and stability in the industrial sector. Management continues to monitor market trends while building M&A opportunities into the pipeline, reinforcing AZZ’s commitment to delivering quality and consistent returns. Investors and industry watchers will want to tune into the company’s investor call for further updates on strategy and market outlook.
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