AZZ seeking M&A opportunities as Q3 earnings rise

AZZ Inc. is looking to make some deals after focusing on paying down debt.

“We do look to get an acquisition or two done, hopefully over the next few months,” Tom Ferguson, president and CEO, said on the company’s third-quarter earnings call on Wednesday.

He added that the company is looking to “get back into that routine where we’re bolting things on as part of our normal course of expansion in certain geographies and places, and growing the business through those bolt-ons. And then hopefully improving their margins to our fleet level.”

Ferguson noted AZZ feels “very good about our leverage as we’re trending down towards two times, which I think is a level that once we get to that, all options are back on the table in terms of potentially increasing dividends, stock buybacks and of course, acquisitions.”

The Fort Worth, Texas-based hot-dip galvanizer cut debt by $80.0 million and reduced its net leverage ratio to 2.6x by the end of the third quarter. The company expects debt reduction to exceed $100 million in the fiscal year.

For the third quarter ended Nov. 30, total sales rose 5.8% year over year, driven mainly by construction projects related to highways, bridges, and other infrastructure projects.

In addition, the company got a boost due to spending on data centers, manufacturing, clean energy initiatives, and power transitions accelerated in calendar-year 2024.

David Nark, senior vice president, said on the call that AZZ’s growth is a sign “that we are in early innings of a multiyear transformative period for infrastructure spending with transmission and distribution as well as renewables growing vs. the prior-year same quarter.”

Capital expenditures for the third quarter totaled $26.4 million, including $11.2 million related to a new aluminum coatings facility in Washington, Mo., which is expected to ramp up in the spring. The $110-million Missouri plant is meant to support the beverage industry’s shift from plastic to aluminum.