AZZ Inc. (AZZ) 10-K Summary: Fiscal Year Ended February 28, 2026
Business Context and Reporting Period
This filing covers the fiscal year ended February 28, 2026. AZZ Inc. is a leading provider of hot-dip galvanizing and coil coating solutions in North America, operating through three segments: AZZ Metal Coatings, AZZ Precoat Metals, and AZZ Infrastructure Solutions (representing a 40% non-controlling interest in the AVAIL Joint Venture). The company operates 62 facilities across the U.S. and Canada, employing approximately 3,767 people.
Key Financial Metrics
| Metric | Fiscal 2026 | Fiscal 2025 |
|---|---|---|
| Total Sales | $1.65 billion | $1.58 billion |
| Net Income | $317.3 million | $128.8 million |
| Diluted EPS | $10.50 | $1.79 |
| Operating Cash Flow | $525.4 million | $249.9 million |
| Adjusted EBITDA (Non-GAAP) | $367.6 million | $347.9 million |
| Total Debt (Gross) | $515.0 million | $900.3 million |
| Net Leverage Ratio | 1.4x | 2.5x |
| Liquidity (Available Credit + Cash) | $358.8 million | Filing text does not provide a clear comparable total for 2025 |
Material Changes vs. Prior Period
- Profitability Surge: Net income increased 146% to $317.3 million, driven primarily by a $209.7 million equity in earnings from the AVAIL Joint Venture (JV). This included a net gain of $261.8 million from the JV's sale of its Electrical Products Group and Welding Services Business.
- Debt Reduction: Gross debt decreased by approximately $385 million (43%) to $515.0 million, significantly improving the net leverage ratio from 2.5x to 1.4x.
- Segment Performance:
- Metal Coatings: Sales rose 14.1% to $758.7 million due to higher volumes in construction and industrial markets.
- Precoat Metals: Sales declined 2.3% to $891.4 million due to lower coil coating volumes, partially offset by higher selling prices.
- Interest Expense: Decreased $25.6 million to $55.7 million due to lower debt balances and repricing of credit facilities.
Guidance, Outlook, and Risks
- Outlook: Management expects sales prices in Metal Coatings to remain consistent, while Precoat Metals prices are expected to increase due to pass-through material costs. Demand is expected to follow typical seasonal patterns.
- Capital Allocation: The Board authorized a new $100 million share repurchase program in January 2026. The quarterly cash dividend was increased to an annual rate of $0.80 per share in June 2025.
- Key Risks:
- Commodity Volatility: Exposure to zinc and natural gas prices, though partially hedged via fixed premiums and contracts.
- Joint Venture Dependency: Significant earnings reliance on the AVAIL JV, which recently divested major business units, leading to a $45.9 million impairment charge on the investment in Q2 2026.
- Legal Contingencies: Ongoing litigation regarding the STI breach of contract case (appeal pending) and environmental remediation liabilities totaling $17.6 million.
- Interest Rates: Approximately half of the $515 million debt is unhedged variable-rate debt, exposing the company to rising interest costs.
Investor Verification Checklist
- AVAIL JV Sustainability: Verify the long-term earnings power of the AVAIL JV post-divestiture, as the 2026 results were heavily skewed by one-time asset sales.
- Debt Covenant Compliance: Confirm continued compliance with the 4.5x maximum leverage ratio covenant under the 2022 Credit Agreement.
- Legal Resolution: Monitor the status of the STI appeal and the finalization of the Nucor and Gainesville Associates settlements.
- Commodity Hedging: Review the effectiveness of zinc and natural gas hedging strategies given the $97.1 million in forward zinc contracts and $7.3 million in natural gas contracts.
- Capital Expenditures: Track the completion and utilization of the new Washington, Missouri aluminum coil coating facility (operational Q1 2026).