Oct 14, 2026 earnings call — Record sales and raised fiscal outlook
Record quarterly sales of $486.9 million, up 16.7% year over year.
Revenue $0.5B (est $0.5B) · EPS $2.00 (est $1.82) · Next-quarter revenue outlook $1.8B–$1.9B
Key quotes
"During the second quarter, we completed the acquisition and integration of Seattle Galvanizing Company, establishing AZZ's presence in the Pacific Northwest."
"The facility has already achieved its expected contribution margin targets for the year."
"While LME zinc prices have increased our pricing model and associated surcharge mechanisms continue to mitigate raw material price volatility."
Analyst Q&A 9
Q2 beat and data-center risk
Q (Ghansham Panjabi · Baird): What drove the second-quarter upside? How do higher rates and backlash against data centers affect the outlook into fiscal 2028?
A: Management said the Seattle Galv acquisition contributed and performed well, and both segments are running with good volumes and pricing protections. They noted winter weather is the main uncertainty for Q4. Data centers are a small part of the business and so far customers have not cancelled or delayed projects.
"1, we are factoring in the acquisition of Seattle Galv that is performing well." — Thomas E. Ferguson (CEO)
Acquisition vs organic growth
Q (Barclays): How much of metal coatings growth came from the Seattle acquisition versus organic? Is tight steel/substrate supply affecting business and visibility into next year?
A: Jason said the acquisition contributed very little to the quarter because it only covered 1 month, so most growth is fundamental. Tom and Jason said substrate tightness mainly affects the Precoat side, raising costs and lead times, and AZZ is dedicating resources to help customers find and move material. They said they carry roughly 3 months of inventory in warehouses and have reasonable visibility through year-end.
"As you think of the acquisition, really only contributed 1 month in the quarter." — Jason Crawford (CFO)
Backlog meaning and PNW moves
Q (Daniel Rizzo · Jefferies): You said a customer backlog is up 45%—what does that mean in dollars and how does it flow through? Is the Pacific Northwest a target for more consolidation after Seattle?
A: David clarified the 45% backlog comment referred to one large metal-coating customer; AZZ itself runs short-cycle work and uses customer backlog as a proxy for future demand. They monitor demand weekly and feel comfortable for the rest of the fiscal year. Tom said the Pacific Northwest has further consolidation opportunities and AZZ likes having anchor facilities to serve customers reliably.
"And just to be clear on that 1, Daniel, that is 1 of our big customers, on the metal coating side who has that backlog increase." — David Nark
Substrate supply and margins
Q (Timna Tanners · Wells Fargo): How does AZZ ensure sufficient galvanized substrate amid tight markets and changing imports? Also, what should we assume about gross margin seasonality in H2?
A: Tom said AZZ does not buy substrate itself but warehouses customer material and helps customers source material through distributors, service centers and mills, and this value-add helps customers meet committed projects. David said the substrate market is tight with some galvanized lead times around 9 weeks and Section 32 reducing supply. Jason said Q4 gross margin should get operating leverage but the Washington facility will continue to affect results, and price increases are taking hold into the back half.
"So we try to help direct our customers to where we find substrate available, which they also have their own resources doing that in many cases." — Thomas E. Ferguson (CEO)
Tulsa project and M&A pipeline
Q (Adam Thalhimer · Thomas Davis): Please explain the Tulsa greenfield/brownfield opportunity and the trend behind similar projects. What is the expected investment size? Any M&A before fiscal year end?
A: Tom said the Tulsa project is effectively a brownfield next to an existing facility and these new builds are driven by customers adding capacity for infrastructure and industrial demand. He said AZZ prefers anchor-customer arrangements and is working on 2–3 other potential greenfield/brownfield opportunities. He gave an investment range earlier in the call and said the M&A pipeline is active with 3 deals under discussion but timing and closures are uncertain.
"it is coming about because of the increased capacity to the high demand on infrastructure." — Thomas E. Ferguson (CEO)
Debt, capital priorities, small expansions
Q (Nick Giles · B. Riley): Why was the debt-reduction target lowered? How are you prioritizing organic growth, M&A, and shareholder returns, and what is the capital intensity of small organic projects?
A: Jason said the change in the debt target was entirely due to using cash for the $57.5 million Seattle acquisition and timing of Avail proceeds, leaving about $40 million variance versus plan. He said organic growth investments are the top capital priority, M&A remains strategic and the company has capacity to execute bolt-ons. Tom added many expansions are sub-$10 million and are quickly accretive because they meet existing demand.
"They are sub-$10 million investments, but they are almost immediately accretive because there is existing demand as soon as we get them started up, which is what happened in Crowley." — Thomas E. Ferguson (CEO)
Seattle facility size and diesel costs
Q (John Franzreb · Sidoti and Company): What was Seattle's revenue run rate pre-acquisition and how does its operational profile compare to legacy metro? Also, do high diesel costs affect customers or AZZ?
A: Tom described the main Seattle facility as roughly in the top third of their fleet by size and contribution and said its margins are somewhat above the fleet average. Jason said AZZ does not disclose specific revenue run rates for acquisitions and noted the $57.5 million price excluded land and building. On diesel, Tom said AZZ feels fuel costs on its trucks but passes them through, and customers prefer closer AZZ sites to reduce transport fuel.
"The main facility which fits probably in the top third of the fleet in terms of size and contribution." — Thomas E. Ferguson (CEO)
Sustainability of growth and capex split
Q (Mark Reichman · Noble Capital): How sustainable is the current metal coatings volume growth and which end markets look strongest through fiscal 2028? What is the split between maintenance and growth capex and will you rely more on acquisitions?
A: Tom said the very high growth rate will moderate as comps get tougher, but base volumes are not expected to decline and AZZ has capacity to take more volume. Jason said normal sustaining capital is about $50 million per year to maintain technology levels, and there is a gray line between sustaining and growth capex. Tom said AZZ will remain active with acquisitions but will stick to coil coating and hot dip galvanizing bolt-ons where they add value.
"But in a normal year, spending $50 million is what we expect just to maintain our technology levels." — Jason Crawford (CFO)
Capacity expansion size and WashMo ramp
Q (Eric Voise · Evercore): How much capacity do the Crowley/Kansas City/Reno expansions add (mid-single digits, teens)? And where does the Washington (WashMo) site sit on utilization and remaining ramp timeline?
A: Jason said the individual expansions are around mid-single-digit capacity increases and across 43 facilities the company is operating at roughly 60% to 70% utilization, leaving room to grow. On WashMo, Jason said Q2 was solid, the anchor customer is on path to reach 75% by year-end, and profitability and utilization continue to improve. Tom added that if the pace continues, WashMo could be the fourth largest site in the fleet by year-end.
"When you look at it, it is probably to your kind of outline, near mid single digits." — Jason Crawford (CFO)