AZZ Inc.: Q3 FY2026 earnings call

What management said about Q3 FY2026, from the documents filed with the SEC on 7 January 2026: press release. Guidance figures: 2 lowered, 4 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Total sales rose 5.5%: Total sales were $425.7 million, up 5.5% from $403.7 million a year earlier, with the two segments moving in opposite directions. Source
• Net income and EPS rose: Net income was $41.1 million, up 22.2%. GAAP diluted EPS was $1.36, up 21.4%. Adjusted diluted EPS was $1.52, up 9.4%, against $1.39 a year earlier. Source
• Metal Coatings sales rose 15.7%: Metal Coatings sales were $195.0 million, up 15.7% on higher volume from infrastructure project spending in construction, industrial and electrical transmission and distribution markets. Source
• Metal Coatings margin fell 120 basis points: Segment Adjusted EBITDA was $59.2 million, a 30.3% margin, down 120 basis points. The company attributed this to a higher mix of electrical, solar and transmission and distribution projects. Source
• Precoat Metals sales fell 1.8%: Precoat Metals sales were $230.7 million, down 1.8%, on weaker building construction, HVAC and transportation end markets, partly offset by container. Source
• Net leverage down to 1.6x: Net leverage was 1.6 times trailing twelve-month Adjusted EBITDA at quarter end, down from 1.7 times at the second quarter end. Source
• AVAIL sold most of Welding Solutions: AVAIL, an unconsolidated investment held through the AVAIL JV, sold most of its Welding Solutions LLC business to Pelican Energy Partners LP. Source
• Annual guidance range narrowed: Management said it narrowed the annual guidance range, citing confidence in business momentum as the fourth quarter advances. Source

“As we advance through the fourth quarter, we remain confident in our business momentum; therefore, we have narrowed our annual guidance range.”

Tom Ferguson, President, and Chief Executive Officer of AZZ

Guidance

What changed from last quarter

• Guidance lowered: Sales ceiling cut to $1.7 billion from $1.725 billion, and Adjusted EBITDA ceiling cut to $380 million from $400 million. Floors unchanged. Source
• Guidance raised: Adjusted diluted EPS floor raised to $5.90 from $5.75; ceiling lowered to $6.20 from $6.25. Source
• Guidance kept: Segment margin ranges, capital expenditure range and 24% annualized tax rate were kept from the prior quarter. Source
• New: On December 31, 2025, AVAIL sold most of its Welding Solutions LLC business to Pelican Energy Partners LP. AZZ keeps a 40% interest in AVAIL. Source

Results and growth drivers

• Total sales rose 5.5%: Total sales were $425.7 million, up 5.5% from $403.7 million a year earlier, with the two segments moving in opposite directions. Source
• Net income and EPS rose: Net income was $41.1 million, up 22.2%. GAAP diluted EPS was $1.36, up 21.4%. Adjusted diluted EPS was $1.52, up 9.4%, against $1.39 a year earlier. Source
• Adjusted EBITDA edged up, margin fell: Consolidated Adjusted EBITDA was $91.2 million, against $90.7 million a year earlier. As a share of sales it was 21.4%, against 22.5%. Source
• Year-to-date sales and EBITDA rose: Nine-month consolidated sales rose $39.1 million, or 3.2%, and Adjusted EBITDA rose $9.6 million, or 3.5%, against the prior year. Source

Segment results and end markets

• Metal Coatings sales rose 15.7%: Metal Coatings sales were $195.0 million, up 15.7% on higher volume from infrastructure project spending in construction, industrial and electrical transmission and distribution markets. Source
• Metal Coatings margin fell 120 basis points: Segment Adjusted EBITDA was $59.2 million, a 30.3% margin, down 120 basis points. The company attributed this to a higher mix of electrical, solar and transmission and distribution projects. Source
• Precoat Metals sales fell 1.8%: Precoat Metals sales were $230.7 million, down 1.8%, on weaker building construction, HVAC and transportation end markets, partly offset by container. Source
• Precoat Metals margin rose 60 basis points: Segment EBITDA was $45.5 million, a 19.7% margin, up 60 basis points. The company attributed this mainly to lower fixed and SG&A costs. Source
• Infrastructure Solutions EBITDA was negative: Infrastructure Solutions Adjusted EBITDA was negative $0.8 million, against $7.1 million a year earlier. The release gives no quarter commentary on this segment. Source

“We are pleased with our third quarter performance as sales expanded to $425.7 million, up 5.5% over the prior year.”

Tom Ferguson, President, and Chief Executive Officer of AZZ

Costs, margins and facilities

• Gross margin and SG&A movements: Gross margin was $101.9 million, against $97.8 million. SG&A was $32.5 million, against $39.2 million, according to the income statement. Source
• Washington, Missouri plant ramping: Management said sales at the new Washington, Missouri facility continue to ramp in line with its expectations through fiscal year end. Source
• Two surface facility closures in nine months: Nine-month restructuring charges of $3.8 million relate to closing two Metal Coatings surface technology facilities. The quarter itself carried no restructuring charge. Source

Cash flow

• Quarter operating cash up 20%: Cash from operating activities was $79.7 million in the quarter, up 20% from last year. Nine-month operating cash was $452.9 million. Source
• Nine-month cash includes AVAIL distribution: The nine-month total includes a $273.2 million distribution from the AVAIL JV, made after AVAIL sold its Electrical Products Group. Management also cited a focus on working capital. Source
• Capital spending and cash management focus: Nine-month capital expenditures were $58.7 million. Management said it will closely manage working capital, capital expenditures and debt through the rest of the fiscal year. Source

“Metal Coatings delivered strong, double-digit sales gains on volume increases, while Precoat Metals continued to navigate weaker demand in certain end markets.”

Tom Ferguson, President, and Chief Executive Officer of AZZ

Balance sheet and leverage

• Net leverage down to 1.6x: Net leverage was 1.6 times trailing twelve-month Adjusted EBITDA at quarter end, down from 1.7 times at the second quarter end. Source
• Debt reduced by $35 million in quarter: Debt was reduced by $35 million in the quarter and by $325.4 million year-to-date. Source
• Long-term debt fell to $534.7 million: Long-term debt, net was $534.7 million at November 30, 2025, down from $852.4 million at February 28, 2025. Source

Capital allocation and shareholder returns

• Share repurchases in the quarter: The company repurchased 201,416 shares for $20.0 million, at an average price of $99.28 per share, in the quarter. Source
• Dividends paid and nine-month total: A cash dividend of $0.20 per share was paid in the quarter. Nine-month dividend payments totaled $17.1 million. Source
• Diluted share count edged higher: Diluted weighted average shares were 30.2 million in the quarter, against 30.1 million a year earlier. Source

Strategy, M&A and AVAIL

• M&A pipeline described as growing: Management said it believes the company is well positioned to capitalize on a growing pipeline of M&A targets, pursued with a disciplined approach. Source
• AVAIL sold most of Welding Solutions: AVAIL, an unconsolidated investment held through the AVAIL JV, sold most of its Welding Solutions LLC business to Pelican Energy Partners LP. Source
• AZZ keeps 40% AVAIL stake: After the sale, AZZ keeps a 40% interest in AVAIL, consisting of its Industrial Lighting and the remaining Welding Solutions business. Source
• Metal Coatings acquisition for $30.1 million: During the first nine months of fiscal 2026, the company completed a Metal Coatings acquisition for $30.1 million. Source

Fiscal 2026 guidance narrowed

• Annual guidance range narrowed: Management said it narrowed the annual guidance range, citing confidence in business momentum as the fourth quarter advances. Source
• Guidance excludes M&A and regulatory changes: Guidance excludes future acquisitions and any federal regulatory changes that may emerge. Source
• Guidance assumes lower interest and tax rate: Management said the guidance reflects its best estimates of full-year market conditions, lower interest expense and a 24% annualized tax rate. Source

Coming up, as management said on 7 January 2026

• Fiscal year ends February 28, 2026: The guidance covers the fiscal year ending February 28, 2026. The release gives no date for the next guidance update. Source

Risks management discussed

• Demand: Precoat Metals sales face softness in building construction, HVAC and transportation end markets, which management described as in line with industry trends. Source
• Operational: Metal Coatings margin is affected by a higher share of electrical, solar, and transmission and distribution projects. Source
• Regulatory: Guidance excludes any federal regulatory changes that may emerge. Source
• Financial: Guidance excludes future equity in earnings from the AVAIL joint venture, so that income is not in the guidance range. Source

Earlier plans management reported on

• On track: Management said the facility ramp is aligned with its expectations through the fiscal year end. Source
• Not stated: The prior quarter said confidence in achieving full-year guidance. This quarter narrowed the range; the release does not restate achievability.

Other quarters

• Q2 FY2027 earnings call
• Q1 FY2027 earnings call
• Q4 FY2026 earnings call
• Q2 FY2026 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.