AZZ Incorporated ((AZZ)) has held its Q4 earnings call. Read on for the main highlights of the call.
AZZ Incorporated’s recent earnings call reflected a robust fiscal 2025 performance, marked by record sales in the Coatings segment and a notable reduction in debt. Despite facing challenges such as weather-related production losses and a decrease in Q4 sales, the company remains optimistic about fiscal 2026, with new facilities coming online and continued debt reduction plans.
Record Sales and Profitability in Coatings Segment
The Coatings segment of AZZ Incorporated achieved record sales and profitability for fiscal 2025. The Metal Coatings division generated $665 million, while Precoat Metals reported an impressive $912 million in sales. This performance underscores the strength and demand within the Coatings segment, contributing significantly to the company’s overall success.
Strong EBITDA Margins
AZZ’s financial health is further highlighted by strong EBITDA margins. Metal Coatings achieved an EBITDA margin of 30.9%, and Precoat Metals reported a margin of 19.6%, both exceeding prior year comparables. These margins reflect efficient operations and strong market positioning.
Significant Debt Reduction
In fiscal 2025, AZZ made substantial progress in reducing its debt, paying down $110 million. The company plans to continue this trend into fiscal 2026, emphasizing financial stability and operational flexibility.
New Facility Near St. Louis
AZZ is expanding its operational capacity with a new greenfield facility near St. Louis, Missouri. This facility is ramping up commercial production and is expected to enhance both capacity and revenue, positioning the company for future growth.
Positive Start to Fiscal 2026
Fiscal 2026 has started on a positive note for AZZ. The Metal Coatings division is recovering from Q4 weather impacts, and Precoat Metals is ramping up production, setting a strong foundation for the year ahead.
Impact of Inclement Weather
The company faced significant challenges due to inclement weather, losing over 200 days of production in Q4. This adversely affected sales and production, highlighting the vulnerability of operations to external factors.
Decrease in Q4 Sales
Sales in Q4 were $351.9 million, representing a 4% decrease from the same quarter in fiscal year 2024. This decline was primarily due to weather-related disruptions, impacting the company’s short-term performance.
Interest Expense Challenges
Interest expenses for the fourth quarter were $17.4 million. Although this figure is down from the previous year, it remains a significant cost that the company continues to manage.
Forward-Looking Guidance
Looking ahead, AZZ Incorporated has set ambitious targets for fiscal 2026. The company expects sales to range from $1.625 billion to $1.725 billion, with adjusted EBITDA between $360 million and $400 million. Adjusted earnings per share are projected to be between $5.50 and $6.10. Additionally, AZZ plans capital expenditures of $60 million to $80 million and anticipates debt paydowns exceeding $165 million, excluding proceeds from the Avail JV sale. The company remains optimistic about the future, driven by infrastructure spending and potential acquisitions.
In conclusion, AZZ Incorporated’s earnings call highlighted a strong fiscal 2025 performance with record sales and significant debt reduction. Despite challenges such as weather-related production losses and a decrease in Q4 sales, the company is poised for growth in fiscal 2026, supported by new facilities and continued financial discipline. Investors can look forward to a promising year ahead as AZZ navigates its strategic initiatives and market opportunities.