AZZ posts record Q1 earnings amid infrastructure demand surge

Financial highlights

The Fort Worth, Texas-based coil coater’s net income surged 332% year over year to $170.9 million, bolstered by a $273.2 million distribution from a joint venture. Sales increased 2.1% to $422.0 million, driven by a 6.0% gain in the Metal Coatings segment. The gain offset a modest 0.8% decline in Precoat Metals revenue.

Metal Coatings revenue reached $187.2 million, with the segment’s adjusted EBITDA margin expanding to 32.9% on higher steel volumes and improved zinc utilization.

Precoat Metals posted sales of $234.7 million and an EBITDA margin of 20.7%, buoyed by favorable mix and productivity gains despite continued softness in HVAC and appliance sectors.

“Sales grew, margins expanded, and customer demand remained healthy,” President and CEO Tom Ferguson said during Wednesday’s earnings call. “We’re on track to set new profitability records in fiscal year 2026.”

AZZ confirmed its new aluminum coating facility in Washington, Mo., has begun shipping qualification orders. It is expected to contribute positively in the second half of the year.

Solid signs of true demand

Executives noted ongoing strength across construction, data centers, and electric transmission.

They also expect solar projects to accelerate following recent policy changes under the Big Beautiful Bill. Projects need to get from planning to production within the next 12 months and then be completed by 2027.

“We do think that a lot of the solar projects that are in the pipeline are going to get pulled forward as a result,” Chief Marketing, Communications, and Investor Relations Officer David Nark commented on the call. “So that could provide some tailwind again for the business in the shorter term.”

Ferguson added that electricity demand is going to increase from the data centers being built, so investments in electricity will be needed as well. “Whether that’s new gas turbine plants or other things, as long as it uses steel that we can galvanize or paint, we’re good with it,” he noted.

Tariffs on imported pre-painted steel continue to shape the demand landscape, with executives citing a 38% year-over-year drop in imports for May following a 50% decline in April.

“We’re seeing those imports fall off dramatically,” Ferguson noted. In addition, they saw customers pulling inventory down in fiscal Q1, signaling to them that true demand is ramping up.

Full pipeline of M&A

AZZ remains active on the M&A front, having closed its acquisition of Canton Galvanizing earlier this month. Ferguson called the deal “immediately accretive.”

He hinted at more bolt-on acquisitions, particularly in regions with limited footprints like the Northwest or Southeast.

“We’ve got a full pipeline,” he said, noting several multi-site opportunities could close by year-end.