Azz Inc 10-Q for FY2026 Q2

Azz Inc (AZZ)

10-Q 2025-10-08 For: 2025-08-31

Added on April 04, 2026

About this 10-Q

Azz Inc filed this 10-Q on October 8, 2025, covering the quarter ended August 31, 2025 (FY2026 Q2).

Headline figures

Quarter ended August 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $417.28M; up 2.0% from $409.01M a year earlier
Net income: $89.35M; up 152.3% from net income of $35.42M a year earlier
Diluted EPS: $2.95; up 150.0% from $1.18 a year earlier

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Texas		75-0948250
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Museum Place, Suite 500
3100 West 7th Street
Fort Worth,	Texas	76107
(Address of principal executive offices)		(Zip Code)


		PAGE NO.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income (Loss)	5
	Condensed Consolidated Statements of Cash Flows	6
	Condensed Consolidated Statements of Changes in Shareholders’ Equity	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	47

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 5	Other Information	48
Item 6.	Exhibits	49

	SIGNATURES	51


	As of
	August 31, 2025		February 28, 2025
Assets
Current assets:
Cash and cash equivalents	$	897	$	1,488
Trade accounts receivable, net of allowance for credit losses of $350 and $419 at August 31, 2025 and February 28, 2025, respectively	142,032		135,149
Other receivables	19,673		12,932
Inventories	108,470		112,313
Contract assets	105,756		106,507
Prepaid expenses and other	12,631		7,055

Total current assets	389,459		375,444
Property, plant and equipment, net	603,260		592,941
Right-of-use assets	29,573		25,951
Goodwill	715,864		703,863
Deferred tax assets	4,018		3,620
Intangible assets, net	419,922		421,850
Investment in AVAIL joint venture	60,219		99,379
Other assets	3,668		4,053
Total assets	$	2,225,983	$	2,227,101
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	114,488	$	106,471
Income taxes payable	7,857		602
Accrued salaries and wages	24,610		37,742
Other accrued liabilities	68,991		68,428
Lease liability, short-term	9,003		7,749

Total current liabilities	224,949		220,992
Long-term debt, net	566,864		852,365
Lease liability, long-term	21,443		19,012
Deferred tax liabilities	64,300		42,819
Other long-term liabilities	45,396		46,418
Total liabilities	922,952		1,181,606
Commitments and contingencies (Note 19)


Shareholders’ equity:
Common stock, $1 par value; 100,000 shares authorized; 30,057 and 29,913 shares issued and outstanding at August 31, 2025 and February 28, 2025, respectively	30,057		29,913
Capital in excess of par value	424,333		418,004
Retained earnings	858,315		609,158
Accumulated other comprehensive loss	(9,674)		(11,580)
Total shareholders’ equity	1,303,031		1,045,495
Total liabilities and shareholders' equity	$	2,225,983	$	2,227,101


	Three Months Ended August 31,				Six Months Ended August 31,
	2025		2024		2025		2024
Sales	$	417,275	$	409,007	$	839,237	$	822,215
Cost of sales	315,983		305,493		633,815		616,031
Gross margin	101,292		103,514		205,422		206,184

Selling, general and administrative	32,831		35,868		67,412		68,789

Operating income	68,461		67,646		138,010		137,395

Interest expense, net	(13,665)		(21,909)		(32,228)		(44,683)
Equity in earnings of unconsolidated subsidiaries	59,345		1,478		232,868		5,302
Other income, net	188		417		1,515		621
Income before income taxes	114,329		47,632		340,165		98,635
Income tax expense	24,983		12,213		79,911		23,614
Net income	89,346		35,419		260,254		75,021
Series A Preferred Stock Dividends	—		—		—		(1,200)
Redemption premium on Series A Preferred Stock	—		—		—		(75,198)
Net income (loss) available to common shareholders	$	89,346	$	35,419	$	260,254	$	(1,377)

Basic earnings (loss) per common share	$	2.97	$	1.19	$	8.68	$	(0.05)
Diluted earnings (loss) per common share	$	2.95	$	1.18	$	8.61	$	(0.05)

Weighted average shares outstanding - Basic	30,037		29,852		29,992		28,294
Weighted average shares outstanding - Diluted	30,244		30,057		30,243		28,294

Cash dividends declared per common share	$	0.20	$	0.17	$	0.37	$	0.34


	Three Months Ended August 31,				Six Months Ended August 31,
	2025		2024		2025		2024
Net income (loss) available to common shareholders	$	89,346	$	35,419	$	260,254	$	(1,377)
Other comprehensive income (loss):
Foreign currency translation adjustments:
Unrealized translation gain	208		864		2,164		439
Unrealized translation gain (loss) for unconsolidated subsidiary, net of tax(1)	655		(531)		896		(531)

Unrealized gain (loss) on derivatives qualified for hedge accounting:
Unrealized loss on interest rate swap, net of tax(2)	(1,214)		(3,062)		(875)		(842)
Amounts reclassified from accumulated other comprehensive income to earnings, net of tax(3)	(243)		(1,113)		(290)		(2,214)
Unrealized gain on interest rate swap, net of tax for unconsolidated subsidiary(4)	9		6		11		147
Other comprehensive income (loss)	(585)		(3,836)		1,906		(3,001)
Comprehensive income (loss)	$	88,761	$	31,583	$	262,160	$	(4,378)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



(1)			Unrealized translation loss for unconsolidated subsidiary is related to our unconsolidated investment in the AVAIL JV and represents our 40% interest in this amount. Net of tax expense (benefit) of $207 and ($210) for the three months ended August 31, 2025 and August 31, 2024, respectively. Net of tax expense (benefit) of $283 and ($210) for the six months ended August 31, 2025 and August 31, 2024, respectively.
(2)			Net of tax benefit of ($384) and ($967) for the three months ended August 31, 2025 and August 31, 2024, respectively. Net of tax benefit of ($271) and ($342) for the six months ended August 31, 2025 and August 31, 2024, respectively.
(3)			Net of tax benefit of ($77) and ($351) for the three months ended August 31, 2025 and August 31, 2024, respectively. Net of tax benefit of ($93) and ($699) for the three months ended August 31, 2025 and August 31, 2024, respectively. See Note 9.
(4)			Unrealized gain (loss) on interest rate swap, net of tax for unconsolidated subsidiary is related to our unconsolidated investment in the AVAIL JV and represents our 40% interest in this amount. Net of tax expense of $4 and $2 for the three months ended August 31, 2025 and August 31, 2024, respectively. Net of tax expense of $5 and $46 for the six months ended August 31, 2025 and August 31, 2024, respectively.


	Three Months Ended August 31, 2025
	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount
Balance at May 31, 2025	30,007	$	30,007	$	418,399	$	774,981	$	(9,089)	$	1,214,298
Share-based compensation	—	—		4,339		—		—		4,339

Common stock issued under stock-based plans and related tax expense	15	15		(426)		—		—		(411)
Common stock issued under employee stock purchase plan	35	35		2,021		—		—		2,056



Cash dividends paid on common stock	—	—		—		(6,012)		—		(6,012)

Net income	—	—		—		89,346		—		89,346
Other comprehensive income	—	—		—		—		(585)		(585)
Balance at August 31, 2025	30,057	$	30,057	$	424,333	$	858,315	$	(9,674)	$	1,303,031


	Six Months Ended August 31, 2025
	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount
Balance at February 28, 2025	29,913	$	29,913	$	418,004	$	609,158	$	(11,580)	$	1,045,495
Share-based compensation	—	—		9,424		—		—		9,424

Common stock issued under stock-based plans and related tax expense	109	109		(5,116)		—		—		(5,007)

Common stock issued under employee stock purchase plan	35	35		2,021		—		—		2,056



Cash dividends paid on common stock	—	—		—		(11,097)		—		(11,097)

Net income	—	—		—		260,254		—		260,254
Other comprehensive income	—	—		—		—		1,906		1,906
Balance at August 31, 2025	30,057	$	30,057	$	424,333	$	858,315	$	(9,674)	$	1,303,031


	Three Months Ended August 31, 2024
	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount
Balance at May 31, 2024	29,814	$	29,814	$	405,309	$	535,168	$	(3,059)	$	967,232
Share-based compensation	—	—		4,903		—		—		4,903

Common stock issued under stock-based plans and related tax expense	20	20		(420)		—		—		(400)
Common stock issued under employee stock purchase plan	43	43		1,526		—		—		1,569
Secondary public offering and issuance of additional common stock	—	—		(55)		—		—		(55)


Cash dividends paid on common stock	—	—		—		(5,076)		—		(5,076)

Net income	—	—		—		35,419		—		35,419
Other comprehensive income	—	—		—		—		(3,836)		(3,836)
Balance at August 31, 2024	29,877	$	29,877	$	411,263	$	565,511	$	(6,895)	$	999,756


	Six Months Ended August 31, 2024
	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount
Balance at February 29, 2024	25,102	$	25,102	$	103,330	$	576,231	$	(3,894)	$	700,769
Share-based compensation	—	—		7,438		—		—		7,438

Common stock issued under stock-based plans and related tax expense	132	132		(5,099)		—		—		(4,967)
Common stock issued under employee stock purchase plan	43	43		1,526		—		—		1,569
Secondary public offering and issuance of additional common stock	4,600	4,600		304,068		—		—		308,668

Dividends on Series A Preferred Stock	—	—		—		(1,200)		—		(1,200)
Cash dividends paid on common stock	—	—		—		(9,343)		—		(9,343)
Redemption premium on Series A Preferred Stock	—	—		—		(75,198)		—		(75,198)
Net income	—	—		—		75,021		—		75,021
Other comprehensive income	—	—		—		—		(3,001)		(3,001)
Balance at August 31, 2024	29,877	$	29,877	$	411,263	$	565,511	$	(6,895)	$	999,756


	July 1, 2025
Assets
Accounts receivable	$	1,474

Inventories	1,049

Property, plant and equipment	4,759
Goodwill	10,871
Intangibles and other assets	12,505
Total fair value of assets acquired	$	30,658
Liabilities
Accounts payable	(237)
Other accrued liabilities	(277)

Total fair value of liabilities assumed	$	(514)
Total purchase price, net of cash acquired	$	30,144



(1)			Other includes less significant markets, such as non-construction agriculture, recreation, petro-chem, AZZ Tubular products and sales from recycling and other miscellaneous customer industries.


	Three Months Ended August 31, 2025
	Metal Coatings		Precoat Metals		Infrastructure Solutions(1)		Corporate(2)		Total
Sales	$	189,984	$	227,291	$	—	$	—	$	417,275
Cost of sales	132,923		183,060		—		—		315,983
Gross margin	57,061		44,231		—		—		101,292

Selling, general and administrative	5,355		7,710		26		19,740		32,831

Operating income (loss)	51,706		36,521		(26)		(19,740)		68,461

Interest expense	—		—		—		(13,665)		(13,665)
Equity in earnings of unconsolidated subsidiaries(5)	—		—		59,345		—		59,345
Other income	2		—		—		186		188
Income (loss) before income tax	$	51,708	$	36,521	$	59,319	(33,219)		114,329
Income tax expense							24,983		24,983
Net income (loss)							$	(58,202)	$	89,346

Depreciation and amortization	$	6,830	$	9,424	$	—	$	6,118	$	22,372



(1)			Infrastructure Solutions segment includes the equity in earnings from our investment in the AVAIL JV, as well as other expenses related to receivables and liabilities that were retained following the sale of the AIS business. See Note 19 for further discussion of the receivables and liabilities.
(2)			Interest expense and Income tax expense are included in the Corporate segment as these items are not allocated to the segments.
(3)			Metal Coatings segment includes restructuring charges of $3.8 million. See Note 18.
(4)			Includes stock-based compensation expense of $2.2 million, of which $0.4 million and $1.8 million are included in Metal Coatings and Corporate, respectively. See Note 16.
(5)			During the first quarter of fiscal 2026, AVAIL completed the sale of the Electrical Products Group ("EPG") to nVent Electric plc. The three and six months ended August 31, 2025 include $61.6 million and $227.5 million, respectively, which represents the gain related to the sale of the EPG, partially offset by an impairment loss on the AVAIL JV and an adjustment related to a change in AVAIL's transfer pricing policy. See Note 8.


	As of
Assets:	August 31, 2025		February 28, 2025
Metal Coatings	$	597,430	$	555,095
Precoat Metals	1,548,718		1,548,377
Infrastructure Solutions - Investment in Joint Venture(1)	60,219		99,379
Corporate	19,616		24,250
Total assets	$	2,225,983	$	2,227,101


	As of
	August 31, 2025		February 28, 2025
Raw material	$	106,176	$	110,005
Work in process	823		518
Finished goods	1,471		1,790
Total inventories	$	108,470	$	112,313


	Three Months Ended August 31,				Six Months Ended August 31,
	2025		2024		2025		2024
Sales:
Construction	$	233,824	$	233,196	$	467,733	$	461,691
Industrial	37,060		36,691		74,730		76,767
Consumer	33,813		31,408		63,905		65,169
Transportation	34,366		36,550		70,355		74,913
Utilities	36,666		30,731		74,521		59,346
Other(1)	41,546		40,431		87,993		84,329
Total sales	$	417,275	$	409,007	$	839,237	$	822,215


Summarized Balance Sheet
	As of
	August 31, 2025(1)		February 28, 2025(1)
Current assets	$	256,722	$	300,404
Long-term assets	77,950		194,528
Total assets	$	334,672	$	494,932

Current liabilities	$	80,005	$	155,585
Long-term liabilities	19,799		134,517
Total liabilities	99,804		290,102
Total partners' capital	234,868		204,830
Total liabilities and partners' capital	$	334,672	$	494,932


Summarized Operating Data
	Three Months Ended August 31,				Six Months Ended August 31,
	2025(1)		2024(1)		2025(1)		2024(1)
Sales	$	43,463	$	119,584	$	211,703	$	249,300
Gross profit	7,328		27,569		52,453		59,086

Net income	693,133		2,780		710,757		10,955



(1)			We report our equity in earnings on a one-month lag basis; therefore, amounts in the summarized financials above are as of and for the three and six months ended July 31, 2025 and 2024 and as of January 31, 2025. Amounts in the table above exclude certain adjustments made by us to record equity in earnings of the AVAIL JV under U.S GAAP for public companies, primarily to reverse the amortization of goodwill. AVAIL's net income for the three and six months ended July 31, 2025 includes a gain on the sale of Electrical Products Group of $699.0 million. Our proportionate share of the gain includes an adjustment for the previous reversal of the amortization of goodwill related to the Electrical Products Group.


	Carrying Value as of August 31, 2025		Fair Value Measurements Using						Carrying Value as of February 28, 2025		Fair Value Measurements Using
			Level 1		Level 2		Level 3				Level 1		Level 2		Level 3



Liabilities:
Interest Rate Swap Agreement(1)	$	1,881	$	—	$	1,881	$	—	$	352	$	—	$	352	$	—
Total Liabilities	$	1,881							$	352




(1)			The fair values at August 31, 2025, and February 28, 2025, are related to the 2025 Swap and the 2022 Swap, respectively.


Fiscal year:	Operating Leases		Finance Leases		Total
2026	$	3,707	$	1,646	$	5,353
2027	6,220		3,270		9,490
2028	4,230		3,173		7,403
2029	3,522		2,964		6,486
2030	1,507		2,298		3,805
2031	689		337		1,026
Thereafter	431		3		434
Total lease payments	20,306		13,691		33,997
Less imputed interest	(1,774)		(1,777)		(3,551)
Total	$	18,532	$	11,914	$	30,446


	Three Months Ended August 31, 2025
	Foreign Currency Translation Gain (Loss)		Foreign Currency Translation Gain (Loss) for Unconsolidated Subsidiary, Net of Tax		Net Actuarial Gain (Loss), Net of Tax		Interest Rate Swap, Net of Tax		Interest Rate Swap, Net of Tax for Unconsolidated Subsidiary		Total
Balance as of beginning of period	$	(8,373)	$	(147)	$	(587)	$	26	$	(8)	$	(9,089)
Other comprehensive income (loss) before reclassification	208		655		—		(1,214)		8		(343)
Amounts reclassified from AOCI	—		—		—		(242)		—		(242)
Net change in AOCI	208		655		—		(1,456)		8		(585)
Balance as of end of period	$	(8,165)	$	508	$	(587)	$	(1,430)	$	—	$	(9,674)


	Trailing Twelve Months Ended
	August 31, 2025		February 28, 2025

Gross debt	$	609,875	$	900,250
Less: Cash per bank statement	(5,417)		(12,670)
Add: Finance lease liability	11,914		6,647
Consolidated indebtedness	$	616,372	$	894,227

Net income	$	314,067	$	128,833
Depreciation and amortization	85,653		82,205
Interest expense	68,827		81,282
Income tax expense	98,147		41,850



EBITDA	566,694		334,170











Cash items(9)	20,352		15,325

Non-cash items(10)	14,544		12,161


Equity in earnings, net of distributions	(236,317)		(3,598)
Adjusted EBITDA per Credit Agreement	$	365,273	$	358,058

Net leverage ratio	1.7x		2.5x



(1)			Earnings per share amounts included in the "Adjusted Net Income and Adjusted Earnings Per Share" table above may not sum due to rounding differences.
(2)			For the six months ended August 31, 2024, diluted earnings per share is based on weighted average shares outstanding of 28,294, as the Series A Preferred Stock that was redeemed May 9, 2024 is anti-dilutive for this calculation. The calculation of adjusted diluted earnings per share is based on weighted average shares outstanding of 30,123, as the Series A Preferred Stock is dilutive to adjusted diluted earnings per share. Adjusted net income for adjusted earnings per share also includes the addback of Series A Preferred Stock dividends for the period noted above. For further information regarding the calculation of earnings per share, see "Item 1. Financial Statements—Note 4."
(3)			Includes restructuring charges related to the closure of two surface technology facilities in our Metal Coatings segment. See "Item 1. Financial Statements—Note 18."
(4)			Related to retention and transition of certain executive management employees.
(5)			On May 9, 2024, we redeemed AZZ's Series A Preferred Stock. The redemption premium represents the difference between the redemption amount paid and the book value of the Series A Preferred Stock.
(6)			During the six months ended August 31, 2025, we recognized additional stock-based compensation expense of $2.2 million upon the adoption of the Executive Retiree Long-term Incentive Program. For further information regarding the adoption of the ERP, see "Item 1. Financial Statements—Note 16."
(7)			During the first quarter of fiscal 2026, AVAIL completed the sale of the Electrical Products Group ("EPG") to nVent Electric plc. The three and six months ended August 31, 2025 includes $61.6 million and $227.5 million, which represents the gain related to the sale of the EPG, partially offset by the recognition of an impairment loss on the AVAIL JV. For further information, see "Item 1. Financial Statements—Note 8."
(8)			The non-GAAP effective tax rate for each of the periods presented is estimated at 24.0%.
(9)			Cash items include certain legal settlements, accruals, and retirement and other severance expenses, and restructuring charges associated with the Metal Coatings segment.
(10)			Non-cash items include stock-based compensation expense.



3.1						Amended and Restated Bylaws dated April 24, 2023 (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K filed with the SEC on April 25, 2023.)

3.2						Amended and Restated Certificate of Formation (with Certificate of Correction dated May 15, 2023) (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed with the SEC on October 10, 2023.)

10.1						Sixth Amendment to Credit Agreement, dated as of August 5, 2025, by and among AZZ Inc., the Guarantors, the Lenders, and Citibank, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on August 5, 2025.)

10.2						Receivables Transfer, dated as of July 10, 2025, by and among The Various Entities Listed on Schedule I (as Originators), Arbor-Crowley, LLC (as Mater Services) and AZZ SPE LLC (as Transferee) (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on July 16, 2025).

10.3						Receivables Contribution Agreement, dated as of July 10, 2025, by and among AZZ SPE LLC (as Contributor), Arbor-Crowley, LLC (as Master Services), and AZZ SPE-LLC (as Company) (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on July 16, 2025).

10.4						Credit and Security Agreement, dated as of July 10, 2025, among AZZ SPE-1 (as Borrower), Arbor-Crowley, (as the Mater Services), the Lenders from Time to Time Party Hereto, and Wells Fargo Bank, National Association (as Administrative Agent) (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the SEC on July 16, 2025).

10.5						Performance Undertaking, dated as of July 10, 2025 (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the SEC on July 16, 2025).

10.6						Pledge Agreement, dated as of July 10, 2025 (incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed with the SEC on July 16, 2025).

10.7						Guaranty Agreement, dated as of July 10, 2025 (incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K filed with the SEC on July 16, 2025).

31.1+						Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2+						Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1++						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2++						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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101.DEF+						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB+						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE+						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Date File (embedded with the Inline XBRL document).


Dated:	October 8, 2025	/s/ Thomas E. Ferguson
		Thomas E. Ferguson
		President and Chief Executive Officer


Dated:	October 8, 2025	/s/ Jason Crawford
		Jason Crawford Senior Vice President, Chief Financial Officer and Principal Accounting Officer