AZZ Q1 FY2026 presentation: EPS surges 510%, balance sheet strengthens

AZZ Incorporated (NYSE:AZZ) reported strong first-quarter fiscal 2026 results on July 9, 2025, highlighted by substantial earnings growth and significant balance sheet improvements, despite mixed performance across its business segments.

Quarterly Performance Highlights

AZZ delivered total sales of $422 million in Q1 FY2026, representing a 2.1% increase compared to the same period last year. The company’s reported diluted earnings per share skyrocketed by 510.1% to $5.66, primarily driven by a substantial AVAIL distribution of $273.2 million included in the quarter’s operating cash flow.

On an adjusted basis, which provides a clearer picture of underlying operational performance, diluted EPS rose 21.9% to $1.78, while adjusted EBITDA increased by 13.1% to $106.4 million.

The strong earnings performance comes after AZZ’s Q4 FY2025 results, which saw the company meeting EPS expectations but missing revenue forecasts. Despite that revenue shortfall, investor sentiment has remained positive, with the stock closing up 2.15% at $98.81 on the day of the earnings announcement, approaching its 52-week high of $101.43.

Segment Analysis

AZZ’s performance across its two main business segments showed divergent trends. The Metal Coatings segment demonstrated robust growth with sales of $187.2 million, up 6.0% year-over-year. Operating income for this segment increased by 5.8% to $50.7 million, while adjusted EBITDA margins improved by 200 basis points.

In contrast, the Precoat Metals segment experienced a slight decline in sales, down 0.8% to $234.7 million. Despite the sales decrease, the segment managed to improve its operating income by 1.8% to $39.4 million, with adjusted EBITDA margins expanding by 50 basis points.

This mixed segment performance reflects the company’s ability to drive profitability improvements even in areas facing revenue challenges, likely through operational efficiencies and cost management initiatives.

Balance Sheet Improvements

A standout aspect of AZZ’s Q1 results was the significant strengthening of its balance sheet. The company reported $314.8 million in cash provided by operating activities, which included a substantial $273.2 million AVAIL distribution.

AZZ leveraged this strong cash position to reduce its debt by $285 million during the quarter, resulting in an improved net leverage ratio of 1.7x. This debt reduction aligns with the company’s previously stated goal of exceeding $165 million in debt reduction for fiscal 2026, as mentioned in their Q4 FY2025 earnings call.

The company also returned value to shareholders through $5.1 million in dividend payments during the first quarter of fiscal 2026, continuing its 16-year track record of consistent dividend payments highlighted in previous financial reports.

Forward-Looking Statements

Based on its strong Q1 performance, AZZ updated its guidance for fiscal year 2026. The company now projects:

• Sales of $1.625-$1.725 billion
• Adjusted EBITDA of $360-$400 million
• Adjusted diluted EPS of $5.75-$6.25

This updated guidance reflects confidence in continued growth and aligns with the company’s previous outlook shared during its Q4 FY2025 earnings call, where management projected sales between $1.625 billion and $1.725 billion with adjusted EPS of $5.50 to $6.10.

The slight upward adjustment to the EPS guidance range suggests management’s increased confidence in operational efficiency and profitability improvements across both business segments, despite the mixed revenue performance in Q1.

Market Context

AZZ’s stock has shown positive momentum following the Q1 earnings announcement, with shares rising 0.65% to $99.45 in after-market trading. This builds on the 2.15% gain during regular trading hours on July 9, 2025.

The stock is currently trading near its 52-week high of $101.43, reflecting strong investor confidence in the company’s strategic direction and financial performance. With its improved balance sheet, consistent dividend payments, and positive earnings growth, AZZ appears well-positioned to continue its upward trajectory as it progresses through fiscal year 2026.

Full presentation:

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