Azz Inc 10-Q for FY2027 Q1

Azz Inc (AZZ)

10-Q 2026-07-08 For: 2026-05-31

Added on July 08, 2026

About this 10-Q

Azz Inc filed this 10-Q on July 8, 2026, covering the quarter ended May 31, 2026 (FY2027 Q1).

Headline figures

Quarter ended May 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $448.53M; up 6.3% from $421.96M a year earlier
Net income: $52.01M; down 69.6% from net income of $170.91M a year earlier
Diluted EPS: $1.72; down 69.6% from $5.66 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	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Cash Flows	4
	Condensed Consolidated Statements of Changes in Shareholders' Equity	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 5.	Other Information	40
Item 6.	Exhibits	41

	SIGNATURES	42


	As of
	May 31, 2026		February 28, 2026
Assets
Current assets:
Cash and cash equivalents	$	1,059	$	705
Trade accounts receivable, net of allowance for credit losses of $128 and $144 at May 31, 2026 and February 28, 2026, respectively	163,872		142,648
Other receivables	20,756		18,990
Inventories	121,196		113,413
Contract assets	117,073		112,785
Prepaid expenses and other	16,098		6,827

Total current assets	440,054		395,368
Property, plant and equipment, net	609,463		609,305
Right-of-use assets	60,924		59,564
Goodwill	714,463		714,753
Deferred tax assets	1,242		1,383
Intangible assets, net	403,946		409,738
Investment in AVAIL joint venture	18,967		19,960
Other assets	3,265		3,403
Total assets	$	2,252,324	$	2,213,474
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	122,054	$	114,590
Income taxes payable	3,427		387
Accrued salaries and wages	19,637		33,847
Other accrued liabilities	74,227		74,771
Lease liability, short-term	9,502		8,679

Total current liabilities	228,847		232,274
Long-term debt, net	480,604		477,738
Lease liability, long-term	52,711		51,969
Deferred tax liabilities	77,441		73,924
Other long-term liabilities	36,677		40,538
Total liabilities	876,280		876,443
Commitments and contingencies (Note 18)


Shareholders' equity:
Common stock, $1 par value; 100,000 shares authorized; 30,017 and 29,880 shares issued and outstanding at May 31, 2026 and February 28, 2026, respectively	30,017		29,880
Capital in excess of par value	424,279		431,155
Retained earnings	929,574		883,544
Accumulated other comprehensive loss	(7,826)		(7,548)
Total shareholders' equity	1,376,044		1,337,031
Total liabilities and shareholders' equity	$	2,252,324	$	2,213,474


	Three Months Ended May 31,
	2026		2025
Sales	$	448,530	$	421,962
Cost of sales	336,361		317,832
Gross margin	112,169		104,130

Selling, general and administrative	35,136		34,581

Operating income	77,033		69,549

Interest expense, net	(11,264)		(18,563)
Equity in earnings of unconsolidated subsidiary	509		173,523
Other income (expense), net	(260)		1,327
Income before income taxes	66,018		225,836
Income tax expense	14,012		54,928
Net income	$	52,006	$	170,908




Basic earnings per common share	$	1.74	$	5.71
Diluted earnings per common share	$	1.72	$	5.66

Weighted average shares outstanding—Basic	29,932		29,941
Weighted average shares outstanding—Diluted	30,159		30,217

Cash dividends declared per common share	$	0.20	$	0.17


	Three Months Ended May 31,
	2026		2025
Net income	$	52,006	$	170,908
Other comprehensive income (loss):
Foreign currency translation adjustments:
Unrealized translation gain (loss)	(551)		1,956
Unrealized translation gain (loss) for unconsolidated subsidiary, net of tax(1)	(1,142)		241

Unrealized gain (loss) on derivatives qualified for hedge accounting:
Unrealized gain on interest rate swap, net of tax(2)	1,361		339
Amounts reclassified from accumulated other comprehensive income to earnings, net of tax(3)	54		(48)
Unrealized gain on interest rate swap, net of tax for unconsolidated subsidiary(4)	—		3
Other comprehensive income (loss)	(278)		2,491
Comprehensive income	$	51,728	$	173,399


☒			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 expense (benefit) of $(361) and $76 for the three months ended May 31, 2026 and May 31, 2025, respectively.
(2)			Net of tax expense of $439 and $113 for the three months ended May 31, 2026 and May 31, 2025, respectively.
(3)			Net of tax expense (benefit) of $17 and $(16) for the three months ended May 31, 2026 and May 31, 2025, respectively. See Note 9.
(4)			Unrealized gain 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. The interest rate swap was written off following the sale of the Electrical Products Group business during the second quarter of fiscal 2026. Net of tax expense of $1 for the three months ended May 31, 2025.


	Three Months Ended May 31, 2026
	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount
Balance at February 28, 2026	29,880	$	29,880	$	431,155	$	883,544	$	(7,548)	$	1,337,031
Share-based compensation	—	—		3,784		—		—		3,784

Common stock issued under stock-based plans and related tax expense	137	137		(10,660)		—		—		(10,523)




Cash dividends paid on common stock	—	—		—		(5,976)		—		(5,976)

Net income	—	—		—		52,006		—		52,006
Other comprehensive income (loss)	—	—		—		—		(278)		(278)
Balance at May 31, 2026	30,017	$	30,017	$	424,279	$	929,574	$	(7,826)	$	1,376,044


	Three Months Ended May 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	—	—		5,086		—		—		5,086

Common stock issued under stock-based plans and related tax expense	94	94		(4,691)		—		—		(4,597)




Cash dividends paid on common stock	—	—		—		(5,085)		—		(5,085)

Net income	—	—		—		170,908		—		170,908
Other comprehensive income (loss)	—	—		—		—		2,491		2,491
Balance at May 31, 2025	30,007	$	30,007	$	418,399	$	774,981	$	(9,089)	$	1,214,298


	July 1, 2025
Assets
Accounts receivable	$	1,409

Inventories	1,049

Property, plant and equipment	4,759
Goodwill	9,585
Intangibles and other assets	13,810
Total fair value of assets acquired	$	30,612
Liabilities
Accounts payable	(237)
Other accrued liabilities	(231)

Total fair value of liabilities assumed	$	(468)
Total purchase price, net of cash acquired	$	30,144



(1)			Other includes less significant markets, such as recreation, sales from recycling and other miscellaneous customer industries.


	Three Months Ended May 31, 2026
	Metal Coatings		Precoat Metals		Infrastructure Solutions(1)		Total
Sales	$	210,305	$	238,225	$	—	$	448,530
Cost of sales	147,452		188,909		—		336,361


Selling, general and administrative	6,302		7,781		—		14,083

Operating income	$	56,551	$	41,535	—		98,086
Equity in earnings of unconsolidated subsidiary					509		509
Income before income taxes					$	509	98,595

Reconciliation to consolidated income before income taxes
Corporate selling, general and administrative expenses							(21,053)
Interest expense							(11,264)
Other expense							(260)
Consolidated income before income taxes							$	66,018



(1)			For the AZZ Infrastructure Solutions segment, the CODM uses only net income before taxes as the measure to allocate resources and assess segment performance. 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.
(2)			For the three months ended May 31, 2025, the AZZ Metal Coatings segment includes restructuring charges of $3.8 million. See Note 17.
(3)			Includes stock-based compensation expense recognized during the three months ended May 31, 2025 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 the AZZ Metal Coatings segment and the Corporate segment, respectively. See Note 15.
(4)			During the first quarter of fiscal 2026, AVAIL completed the sale of the Electrical Products Group ("EPG") to nVent Electric plc. Following the completion of the sale, we received a distribution of $273.2 million during the three months ended May 31, 2025, which is in excess of the investment in the AVAIL JV, which was $107.4 million as of May 31, 2025. The excess distribution of $165.8 million was recorded as equity in earnings of unconsolidated subsidiary during the three months ended May 31, 2025. See Note 8.


	As of
Segment Assets(1)	May 31, 2026		February 28, 2026
Metal Coatings(2)	$	622,749	$	604,107
Precoat Metals(3)	1,589,600		1,562,994
Infrastructure Solutions - Investment in Joint Venture	18,967		19,960
Total reportable segment assets	2,231,316		2,187,061
Corporate	21,008		26,413
Consolidated assets	$	2,252,324	$	2,213,474


	As of
	May 31, 2026		February 28, 2026
Raw material	$	118,904	$	111,483
Work in process	840		733
Finished goods	1,452		1,197
Total inventories	$	121,196	$	113,413


	Three Months Ended May 31,
	2026		2025
Sales:
Construction	$	258,002	$	248,417
Industrial	40,590		37,670
Infrastructure	55,970		56,443
Transportation	27,392		27,738
HVAC & Appliances	22,772		23,341
Container	20,776		7,046
Other(1)	23,028		21,307
Total sales	$	448,530	$	421,962


	As of
Long-lived assets	May 31, 2026		February 28, 2026
United States	$	648,747	$	647,182
Canada	21,640		21,687

Total	$	670,387	$	668,869


Summarized Balance Sheet
	As of
	May 31, 2026(1)		February 28, 2026(1)
Current assets	$	166,713	$	225,298
Long-term assets	17,218		19,330
Total assets	$	183,931	$	244,628

Current liabilities	$	45,504	$	59,724
Long-term liabilities	11,623		12,732
Total liabilities	57,127		72,456
Total partners' capital	126,804		172,172
Total liabilities and partners' capital	$	183,931	$	244,628



(1)			Segment assets include identifiable intangible assets associated with each reportable segment. The related amortization expense for intangible assets is not allocated to the segments.
(2)			Identifiable intangible assets related to AZZ Metal Coatings of $33.8 million and $35.0 million, net of accumulated amortization, as of May 31, 2026 and February 28, 2026, respectively, are included in segment assets. The associated amortization expense is not allocated to the segment.
(3)			Identifiable intangible assets related to AZZ Precoat Metals of $370.1 million and $374.8 million, net of accumulated amortization, as of May 31, 2026 and February 28, 2026, respectively, are included in segment assets. The associated amortization expense is not allocated to the segment.


	Three Months Ended May 31,
Depreciation and amortization	2026		2025
Metal Coatings	$	7,266	$	6,660
Precoat Metals	10,222		9,123

Total reportable segment depreciation and amortization	17,488		15,783
Corporate	6,031		6,044
Consolidated depreciation and amortization	$	23,519	$	21,827


Summarized Operating Data
	Three Months Ended May 31,
	2026(1)		2025(1)
Sales	$	7,472	$	168,240
Gross profit	$	2,639	$	45,125
Income (loss) before income taxes	$	1,625	$	17,474
Net income (loss)	$	1,457	$	17,624



(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 months ended April 30, 2026 and 2025 and as of January 31, 2026. 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. The three months ended May 31, 2026 reflects operations from AVAIL's Industrial Lighting business and WSI Brazil business.


	Carrying Value as of May 31, 2026		Fair Value Measurements Using						Carrying Value as of February 28, 2026		Fair Value Measurements Using
			Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
Assets
Interest Rate Swap Agreement(1)	$	25	$	—	$	25	$	—	$	—	$	—	$	—	$	—
Total Assets	$	25							$	—
Liabilities
Interest Rate Swap Agreement(1)	$	—	$	—	$	—	$	—	$	1,847	$	—	$	1,847	$	—
Total Liabilities	$	—							$	1,847


(1)			The interest rate swap agreement included in the table above represents the 2025 Swap at May 31, 2026 and February 28, 2026.


Fiscal year:	Operating Leases		Finance Leases		Total
2027	$	6,408	$	3,450	$	9,858
2028	7,584		4,508		12,092
2029	6,784		4,275		11,059
2030	4,724		3,574		8,298
2031	3,820		1,312		5,132
2032	3,095		58		3,153
Thereafter	41,623		37		41,660
Total lease payments	74,038		17,214		91,252
Less imputed interest	(27,082)		(1,957)		(29,039)
Total	$	46,956	$	15,257	$	62,213


	Three Months Ended May 31, 2026
	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	$	(7,790)	$	432	$	1,207	$	(1,397)	$	—	$	(7,548)
Other comprehensive income (loss) before reclassification	(551)		(1,142)		—		1,361		—		(332)
Amounts reclassified from AOCI	—		—		—		54		—		54
Net change in AOCI	(551)		(1,142)		—		1,415		—		(278)
Balance as of end of period	$	(8,341)	$	(710)	$	1,207	$	18	$	—	$	(7,826)



(1)			The AZZ Infrastructure Solutions segment includes the equity in earnings from our investment in the AVAIL JV.
(2)			Interest expense and Income tax expense are included in the Corporate segment as these items are not allocated to the segments.
(3)			For the three months ended May 31, 2025, the AZZ Metal Coatings segment includes restructuring charges of $3.8 million. See "Item 1. Financial Statements—Note 17."
(4)			Includes stock-based compensation expense of $2.2 million, of which $0.4 million and $1.8 million are included in the AZZ Metal Coatings segment and the Corporate segment, respectively. See "Item 1. Financial Statements—Note 15."
(5)			During the first quarter of fiscal 2026, AVAIL completed the sale of the Electrical Products Group ("EPG") to nVent Electric plc. Following the completion of the sale, we received a distribution of $273.2 million during the three months ended May 31, 2025, which was $107.4 million as of May 31, 2025. The excess distribution of $165.8 million was recorded as equity in earnings of unconsolidated subsidiary during three months ended May 31, 2025. See "Item 1. Financial Statements—Note 8."


	Trailing Twelve Months Ended
	May 31, 2026		February 28, 2026

Gross debt	$	515,000	$	515,000
Less: Cash per bank statement	(5,500)		(13,227)
Add: Finance lease liability	15,256		13,746
Consolidated indebtedness	$	524,756	$	515,519

Net income	$	198,357	$	317,260
Depreciation and amortization	91,747		90,056
Interest expense	48,350		55,650
Income tax expense	62,140		103,055

EBITDA	$	400,594	$	566,021













Cash items(7)	349		5,426

Non-cash items(8)	13,530		14,832


Equity in earnings, net of distributions	(36,720)		(209,733)
Adjusted EBITDA per Credit Agreement	$	377,753	$	376,546

Net leverage ratio	1.4x		1.4x



(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)			Includes restructuring charges related to the closure of two surface technology facilities in our AZZ Metal Coatings segment. See "Item 1. Financial Statements—Note 17."
(3)			During the three months ended May 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 15."
(4)			For the three months ended May 31, 2026, represents adjustments related to the loss recognized in fiscal year 2026 for the sale of AVAIL's Welding Services Business. During the first quarter of fiscal 2026, AVAIL completed the sale of the Electrical Products Group ("EPG") to nVent Electric plc. Following the completion of the sale, we received a distribution of $273.2 million during the three months ended May 31, 2025, exceeding the investment in the AVAIL JV of $107.4 million as of May 31, 2025. The excess distribution of $165.8 million was recorded as equity in earnings of unconsolidated subsidiary during the three months ended May 31, 2025. See "Item 1. Financial Statements—Note 8."
(5)			The write-off of $0.6 million of unamortized debt financing costs relates to the refinancing of our Revolving Credit Facility on May 7, 2026, which resulted in a partial extinguishment at the lender level. For further information, see "Item 1. Financial Statements—Note 10."
(6)			The non-GAAP effective tax rate for each of the periods presented is estimated at 24.0%.
(7)			Cash items include restructuring charges associated with the AZZ Metal Coatings segment and other accruals.
(8)			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						Seventh Amendment to Credit Agreement dated as of May 7, 2026, by and among AZZ Inc., the Gurantors, the Lenders, and Wells Fargo Bank, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to the Company Current Report on Form 8-K filed with the SEC on May 8, 2026.

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:	July 8, 2026	/s/ Thomas E. Ferguson
		Thomas E. Ferguson
		President and Chief Executive Officer


Dated:	July 8, 2026	/s/ Jason Crawford
		Jason Crawford Senior Vice President, Chief Financial Officer and Principal Accounting Officer