Azz Inc 10-Q for FY2026 Q3

Azz Inc (AZZ)

10-Q 2026-01-07 For: 2025-11-30

Added on April 04, 2026

About this 10-Q

Azz Inc filed this 10-Q on January 7, 2026, covering the quarter ended November 30, 2025 (FY2026 Q3).

Headline figures

Quarter ended November 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $425.75M; up 5.5% from $403.65M a year earlier
Net income: $41.08M; up 22.2% from net income of $33.6M a year earlier
Diluted EPS: $1.36; up 21.4% from $1.12 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	46
Item 4.	Controls and Procedures	46

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 5	Other Information	47
Item 6.	Exhibits	48

	SIGNATURES	49


	As of
	November 30, 2025		February 28, 2025
Assets
Current assets:
Cash and cash equivalents	$	623	$	1,488
Trade accounts receivable, net of allowance for credit losses of $369 and $419 at November 30, 2025 and February 28, 2025, respectively	148,318		135,149
Other receivables	24,925		12,932
Inventories	107,477		112,313
Contract assets	110,409		106,507
Prepaid expenses and other	9,011		7,055

Total current assets	400,763		375,444
Property, plant and equipment, net	604,091		592,941
Right-of-use assets	30,940		25,951
Goodwill	713,998		703,863
Deferred tax assets	4,004		3,620
Intangible assets, net	415,288		421,850
Investment in AVAIL joint venture	58,570		99,379
Other assets	3,253		4,053
Total assets	$	2,230,907	$	2,227,101
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	117,183	$	106,471
Income taxes payable	12,458		602
Accrued salaries and wages	31,658		37,742
Other accrued liabilities	71,219		68,428
Lease liability, short-term	9,501		7,749

Total current liabilities	242,019		220,992
Long-term debt, net	534,746		852,365
Lease liability, long-term	22,362		19,012
Deferred tax liabilities	68,065		42,819
Other long-term liabilities	44,467		46,418
Total liabilities	911,659		1,181,606
Commitments and contingencies (Note 19)


Shareholders' equity:
Common stock, $1 par value; 100,000 shares authorized; 29,856 and 29,913 shares issued and outstanding at November 30, 2025 and February 28, 2025, respectively	29,856		29,913
Capital in excess of par value	426,800		418,004
Retained earnings	873,589		609,158
Accumulated other comprehensive loss	(10,997)		(11,580)
Total shareholders' equity	1,319,248		1,045,495
Total liabilities and shareholders' equity	$	2,230,907	$	2,227,101


	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Sales	$	425,746	$	403,654	$	1,264,983	$	1,225,869
Cost of sales	323,805		305,876		957,620		921,907
Gross margin	101,941		97,778		307,363		303,962

Selling, general and administrative	32,462		39,243		99,874		108,032

Operating income	69,479		58,535		207,489		195,930

Interest expense, net	(12,206)		(19,223)		(44,434)		(63,906)
Equity in earnings (loss) of unconsolidated subsidiaries	(1,437)		7,168		231,431		12,470
Other income (expense), net	(276)		(763)		1,239		(142)
Income before income taxes	55,560		45,717		395,725		144,352
Income tax expense	14,485		12,114		94,396		35,728
Net income	41,075		33,603		301,329		108,624
Series A Preferred Stock Dividends	—		—		—		(1,200)
Redemption premium on Series A Preferred Stock	—		—		—		(75,198)
Net income available to common shareholders	$	41,075	$	33,603	$	301,329	$	32,226

Basic earnings per common share	$	1.37	$	1.12	$	10.05	$	1.12
Diluted earnings per common share	$	1.36	$	1.12	$	9.97	$	1.11

Weighted average shares outstanding—Basic	29,963		29,879		29,983		28,819
Weighted average shares outstanding—Diluted	30,198		30,118		30,231		29,076

Cash dividends declared per common share	$	0.20	$	0.17	$	0.57	$	0.51


	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Net income available to common shareholders	$	41,075	$	33,603	$	301,329	$	32,226
Other comprehensive income (loss):
Foreign currency translation adjustments:
Unrealized translation gain (loss)	(1,033)		(1,943)		1,131		(1,504)
Unrealized translation gain (loss) for unconsolidated subsidiary, net of tax(1)	(158)		(730)		738		(1,261)

Unrealized gain (loss) on derivatives qualified for hedge accounting:
Unrealized gain (loss) on interest rate swap, net of tax(2)	83		1,037		(792)		194
Amounts reclassified from accumulated other comprehensive income to earnings, net of tax(3)	(215)		(663)		(505)		(2,876)
Unrealized gain (loss) on interest rate swap, net of tax for unconsolidated subsidiary(4)	—		(188)		11		(41)
Other comprehensive income (loss)	(1,323)		(2,487)		583		(5,488)
Comprehensive income	$	39,752	$	31,116	$	301,912	$	26,738


☒			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 gain (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 benefit of $(54) and ($227) for the three months ended November 30, 2025 and November 30, 2024, respectively. Net of tax expense (benefit) of $228 and ($438) for the nine months ended November 30, 2025 and November 30, 2024, respectively.
(2)			Net of tax expense of $31 and $327 for the three months ended November 30, 2025 and November 30, 2024, respectively. Net of tax benefit of ($240) and ($15) for the nine months ended November 30, 2025 and November 30, 2024, respectively.
(3)			Net of tax benefit of ($67) and ($209) for the three months ended November 30, 2025 and November 30, 2024, respectively. Net of tax benefit of ($160) and ($908) for the nine months ended November 30, 2025 and November 30, 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 benefit of $0 and ($59) for the three months ended November 30, 2025 and November 30, 2024, respectively. Net of tax expense (benefit) of $5 and ($13) for the nine months ended November 30, 2025 and November 30, 2024, respectively.


	Three Months Ended November 30, 2025
	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount
Balance at August 31, 2025	30,057	$	30,057	$	424,333	$	858,315	$	(9,674)	$	1,303,031
Share-based compensation	—	—		2,467		—		—		2,467




Repurchase and retirement of treasury shares	(201)	(201)		—		(19,799)		—		(20,000)

Cash dividends paid on common stock	—	—		—		(6,002)		—		(6,002)

Net income	—	—		—		41,075		—		41,075
Other comprehensive income (loss)	—	—		—		—		(1,323)		(1,323)
Balance at November 30, 2025	29,856	$	29,856	$	426,800	$	873,589	$	(10,997)	$	1,319,248


	Nine Months Ended November 30, 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	—	—		11,891		—		—		11,891

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

Repurchase and retirement of treasury shares	(201)	(201)		—		(19,799)		—		(20,000)

Cash dividends paid on common stock	—	—		—		(17,099)		—		(17,099)

Net income	—	—		—		301,329		—		301,329
Other comprehensive income (loss)	—	—		—		—		583		583
Balance at November 30, 2025	29,856	$	29,856	$	426,800	$	873,589	$	(10,997)	$	1,319,248


	Three Months Ended November 30, 2024
	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount
Balance at August 31, 2024	29,877	$	29,877	$	411,263	$	565,511	$	(6,895)	$	999,756
Share-based compensation	—	—		3,796		—		—		3,796






Cash dividends paid on common stock	—	—		—		(5,080)		—		(5,080)

Net income	—	—		—		33,603		—		33,603
Other comprehensive income (loss)	—	—		—		—		(2,487)		(2,487)
Balance at November 30, 2024	29,877	$	29,877	$	415,059	$	594,034	$	(9,382)	$	1,029,588


	Nine Months Ended November 30, 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	—	—		11,234		—		—		11,234

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	—	—		—		(14,423)		—		(14,423)
Redemption premium on Series A Preferred Stock	—	—		—		(75,198)		—		(75,198)
Net income	—	—		—		108,624		—		108,624
Other comprehensive income (loss)	—	—		—		—		(5,488)		(5,488)
Balance at November 30, 2024	29,877	$	29,877	$	415,059	$	594,034	$	(9,382)	$	1,029,588


	July 1, 2025
Assets
Accounts receivable	$	1,474

Inventories	1,049

Property, plant and equipment	4,759
Goodwill	9,566
Intangibles and other assets	13,810
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 November 30, 2025
	Metal Coatings		Precoat Metals		Infrastructure Solutions(1)		Corporate(2)		Total
Sales	$	194,998	$	230,748	$	—	$	—	$	425,746
Cost of sales	136,873		186,932		—		—		323,805
Gross margin	58,125		43,816		—		—		101,941

Selling, general and administrative	6,038		7,932		21		18,471		32,462

Operating income (loss)	52,087		35,884		(21)		(18,471)		69,479

Interest expense	—		—		—		(12,206)		(12,206)
Equity in earnings of unconsolidated subsidiaries	—		—		(1,437)		—		(1,437)
Other income (expense)	15		—		—		(291)		(276)
Income (loss) before income tax	$	52,102	$	35,884	$	(1,458)	(30,968)		55,560
Income tax expense							14,485		14,485
Net income (loss)							$	(45,453)	$	41,075

Depreciation and amortization	$	7,070	$	9,617	$	—	$	6,090	$	22,777



(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 recognized upon the adoption of the Executive Retiree LTI Program 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 months ended November 30, 2025 includes an adjustment to the gain related to the sale of the EPG of $(0.6) million. The nine months ended November 30, 2025 includes $226.8 million, which represents the gain related to the sale of the EPG, offset by the recognition of 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:	November 30, 2025		February 28, 2025
Metal Coatings	$	596,743	$	555,095
Precoat Metals	1,557,397		1,548,377
Infrastructure Solutions - Investment in Joint Venture(1)	58,570		99,379
Corporate	18,197		24,250
Total assets	$	2,230,907	$	2,227,101


	As of
	November 30, 2025		February 28, 2025
Raw material	$	105,059	$	110,005
Work in process	793		518
Finished goods	1,625		1,790
Total inventories	$	107,477	$	112,313


	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Sales:
Construction	$	240,228	$	233,653	$	707,961	$	695,344
Industrial	37,906		37,551		112,636		114,318
Consumer	32,736		29,464		96,641		94,633
Transportation	35,139		35,047		105,493		109,959
Utilities	39,860		29,599		114,381		88,944
Other(1)	39,877		38,340		127,871		122,671
Total sales	$	425,746	$	403,654	$	1,264,983	$	1,225,869


Summarized Balance Sheet
	As of
	November 30, 2025(1)		February 28, 2025(1)
Current assets	$	255,145	$	300,404
Long-term assets	75,771		194,528
Total assets	$	330,916	$	494,932

Current liabilities	$	82,755	$	155,585
Long-term liabilities	20,004		134,517
Total liabilities	102,759		290,102
Total partners' capital	228,157		204,830
Total liabilities and partners' capital	$	330,916	$	494,932


Summarized Operating Data
	Three Months Ended November 30,				Nine Months Ended November 30,
	2025(1)		2024(1)		2025(1)		2024(1)
Sales	$	34,137	$	150,998	$	245,840	$	400,298
Gross profit	5,283		42,842		57,736		101,928
Income (loss) before income taxes	(6,279)		19,826		704,907		30,025
Net income (loss)	(6,055)		21,015		704,702		32,036



(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 nine months ended October 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 nine months ended October 31, 2025 includes a gain on the sale of Electrical Products Group of $697.5 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 November 30, 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)	$	2,049	$	—	$	2,049	$	—	$	352	$	—	$	352	$	—
Total Liabilities	$	2,049							$	352


(1)			The fair values at November 30, 2025, and February 28, 2025, are related to the 2025 Swap and the 2022 Swap, respectively.


Fiscal year:	Operating Leases		Finance Leases		Total
2026	$	1,891	$	987	$	2,878
2027	6,465		3,908		10,373
2028	4,439		3,812		8,251
2029	3,732		3,581		7,313
2030	1,719		2,886		4,605
2031	871		711		1,582
Thereafter	524		3		527
Total lease payments	19,641		15,888		35,529
Less imputed interest	(1,709)		(1,957)		(3,666)
Total	$	17,932	$	13,931	$	31,863


	Three Months Ended November 30, 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	$	(8,165)	$	508	$	(587)	$	(1,430)	$	—	$	(9,674)
Other comprehensive income (loss) before reclassification	(1,033)		(158)		—		83		—		(1,108)
Amounts reclassified from AOCI	—		—		—		(215)		—		(215)
Net change in AOCI	(1,033)		(158)		—		(132)		—		(1,323)
Balance as of end of period	$	(9,198)	$	350	$	(587)	$	(1,562)	$	—	$	(10,997)


	Trailing Twelve Months Ended
	November 30, 2025		February 28, 2025

Gross debt	$	574,875	$	900,250
Less: Cash per bank statement	(7,200)		(12,670)
Add: Finance lease liability	13,931		6,647
Consolidated indebtedness	$	581,606	$	894,227

Net income	$	321,538	$	128,833
Depreciation and amortization	87,798		82,205
Interest expense	61,810		81,282
Income tax expense	100,518		41,850

EBITDA	$	571,664	$	334,170













Cash items(9)	13,651		15,325

Non-cash items(10)	13,915		12,161


Equity in earnings, net of distributions	(229,324)		(3,598)
Adjusted EBITDA per Credit Agreement	$	369,906	$	358,058

Net leverage ratio	1.6x		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 nine months ended November 30, 2024, diluted earnings per share is based on weighted average shares outstanding of 29,076, 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 nine months ended November 30, 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 months ended November 30, 2025 includes an adjustment to the gain related to the sale of the EPG of $(0.6) million. The nine months ended November 30, 2025 includes $226.8 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 and an adjustment related to a change in AVAIL's transfer pricing policy. 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, retirement and other severance expenses, and restructuring charges associated with the Metal Coatings segment.
(10)			Non-cash items include stock-based compensation expense.


Period	Total Number of Share Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value that May Yet Be Used Under the Plans or Programs
Beginning balance, February 28, 2025					$	53,187,452
March 1 through March 31, 2025	—	$	—	—	53,187,452
April 1 through April 30, 2025	—	—		—	53,187,452
May 1 through May 31, 2025	—	—		—	53,187,452
June 1 through June 30, 2025	—	—		—	53,187,452
July 1 through July 31, 2025	—	—		—	53,187,452
August 1 through August 31, 2025	—	—		—	53,187,452
September 1 through September 30, 2025	—	—		—	53,187,452
October 1 through October 31, 2025	201,416	99.28		201,416	33,191,526
November 1 through November 30, 2025	—	—		—	33,191,526



Total	201,416	$	99.28	201,416	$	33,191,526



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.)

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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Dated:	January 7, 2026	/s/ Thomas E. Ferguson
		Thomas E. Ferguson
		President and Chief Executive Officer


Dated:	January 7, 2026	/s/ Jason Crawford
		Jason Crawford Senior Vice President, Chief Financial Officer and Principal Accounting Officer