AZZ Raises Fiscal 2027 Outlook After Sales Growth Accelerates
Second-quarter sales reached a record $486.9 million, up 16.7% from a year earlier, and the company lifted full-year sales guidance to $1.825 billion to $1.875 billion.
AZZ Inc. (AZZ), the independent provider of hot-dip galvanizing and coil coating, posted record second-quarter sales of $486.9 million, up 16.7% from a year earlier, after year-over-year growth had been 6.3% in the first quarter of fiscal 2027.
The acceleration showed up in both reportable segments. Metal Coatings sales were $233.5 million, up 22.9% from the year-ago quarter, faster than the 12.3% increase in the prior quarter. The gain reflected a higher volume of steel processed in construction, industrial, infrastructure and transportation end markets, plus higher average selling prices in response to inflation.
Precoat Metals sales were $253.4 million, up 11.5% from a year earlier, after 1.5% growth in the first quarter. The pickup reflected higher coil-coating volume and average selling prices, including vendor price increases passed through to customers, and higher sales from the Washington, Missouri facility. Those gains were partly offset by lower volume in HVAC and appliances, transportation and other end markets.
Operating income was $83.8 million, up 22.4% from a year earlier. GAAP net income was $58.5 million, down 34.6%, because the year-ago quarter included equity in earnings from the AVAIL joint venture’s sale of the Electrical Products Group. Adjusted net income was $60.1 million, up 28.1%. GAAP diluted earnings were $1.94 a share; adjusted diluted earnings were $2.00, up 29.0%.
Consolidated Adjusted EBITDA was $110.9 million, or 22.8% of sales, versus $88.7 million, or 21.3% of sales, a year earlier. Metal Coatings Adjusted EBITDA was $71.6 million, a 30.7% margin. Precoat Metals Adjusted EBITDA was $53.8 million, a 21.2% margin, up 100 basis points from the year-ago second quarter; the margin increase was primarily due to higher sales.
Cash flow from operations was $102.8 million, up 76.1% from a year earlier, after $37.1 million in the first quarter. For the first six months of fiscal 2027, the company generated $140.0 million of operating cash. Net leverage improved to 1.3 times trailing twelve-month Adjusted EBITDA from 1.4 times at the end of the first quarter.
During the quarter AZZ completed the $57.5 million acquisition of Seattle Galvanizing in Arlington, Washington, in the Metal Coatings segment, and recorded $2.8 million of acquisition costs. It repurchased 136,303 shares for $20.0 million at an average price of $146.71, paid a $0.24 cash dividend, a 20% increase from $0.20, and reduced debt by $15.0 million.
President and Chief Executive Officer Tom Ferguson said the quarter reflected organic sales growth, the continued ramp of the Washington, Missouri plant and the Pacific Northwest galvanizing acquisition, and that the company was on track to set new sales and profitability records for fiscal 2027.
AZZ raised fiscal 2027 guidance for the year ending February 28, 2027. Sales guidance moved to $1.825 billion to $1.875 billion from $1.80 billion to $1.85 billion. Adjusted EBITDA guidance moved to $380 million to $420 million from $375 million to $415 million. Adjusted diluted EPS guidance moved to $7.00 to $7.30 from $6.75 to $7.15.
The new ranges reflect quarterly performance, sustained sales momentum across both segments and increased confidence in the remainder of the year. Guidance assumes the Washington, Missouri plant is accretive to earnings in fiscal 2027, capital expenditures of about $80 million to $100 million, interest expense of $35 million to $45 million, an annualized effective tax rate of 25%, and debt reduction of $100 million to $140 million. The outlook excludes M&A beyond Seattle Galvanizing and any federal regulatory changes.