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Market ClerkRecap
Sat Oct 24 · markets closed6 signals on Oct 2394 insider buys this week · $48.3MCIRO short report next: Oct 31The week ahead

AZZ

AZZ INC
NYSE · INDUSTRIALS · COATING, ENGRAVING & ALLIED SERVICES
132.36
−1.03 −0.77%
USD · close Oct 23
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FLAG · shorts 37
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MKT CAP $4BP/E 20.2DIV YIELD 0.60%FCF YIELD 4.25%REV TTM $1.7B +5.7%NET INCOME $198.4M −23.7%NET DEBT $978.9M52W 97.64 – 160.17SEC XBRL · TTM TO Invalid Date

How AZZ rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026
Text kept
28%
of sentences unchanged
Added
497
new sentences
Dropped
462
sentences removed
Length
+801
words, now 35,244

New in FY2026

  • A discussion regarding our financial condition and results of operations as well as our liquidity and capital resources for fiscal year 2025 compared to fiscal year 2024 can be found under "Item 7.
  • Management's Discussion and Analysis" in our Annual Report on Form 10-K for the fiscal year ended February 28, 2025, filed with the SEC on April 21, 2025, which such discussion is hereby incorporated by reference.
  • We operate three distinct business segments, the AZZ Metal Coatings segment, the AZZ Precoat Metals segment, and the AZZ Infrastructure Solutions segment, which consists of the Company's 40% investment in the AVAIL JV joint venture.
  • For example, the twelve-month period ended February 28, 2026 is referred to as "fiscal 2026," "fiscal year 2026", "current year" or "current period", and the twelve-month period ended February 28, 2025 is referred to as "fiscal 2025," "fiscal year 2025," "prior year" or "prior year period." Business Operations Update Our results for the year ended February 28, 2026 were favorably impacted primarily by the recognition of equity in earnings for the AVAIL JV, which included the gain from AVAIL's sale of the Electrical Products Group and the Welding Services Business, and by the growth in demand for our manufactured solutions in the electrical, construction and industrial end markets .
  • The equity in earnings from the AVAIL JV was the primary contributor to net income available to common shareholders of $317.3 million for the year ended February 28, 2026.
  • Our operating results for fiscal 2026, including operating results by segment, are described in the summary on the following page, and detailed descriptions can be found below under “Results of Operations.” Our operations generated $525.4 million of cash in fiscal 2026.
  • The components of our liquidity and descriptions of our cash flows, capital investments, and other utilities, construction and matters impacting our liquidity and capital resources can be found below under "Liquidity and Capital Resources." Outlook While it is difficult to predict future North American economic activity and its impact on the demand for our galvanizing and coil coating solutions, as well the impact that political or regulatory developments may have on us, we have noted several factors below that have impacted or may impact our results of operations during the first quarter of fiscal 2027. • Sales prices in our AZZ Metal Coatings segment are expected to remain consistent with current levels.
  • Fluctuations in product mix, along with competitive market pressures, may impact selling price. • Sales prices in our AZZ Precoat Metals segment are expected to increase on average from past levels, resulting from passing through higher pricing on specified materials along with increased overall selling prices, although fluctuations in mix may impact the average selling price. • Demand in our AZZ Metal Coatings and AZZ Precoat Metals segments is expected to follow our typical seasonal patterns. • Volumes for our AZZ Metal Coatings segment remain at normal seasonal levels, which should support the continued demand for our metal coatings solutions. • Customer inventories for our AZZ Precoat Metals segment remain at normal seasonal levels, which should support the continued demand for our coil coating solutions.
  • Results of Operations Income before income tax for our operating segments and corporate operations for fiscal 2026 and 2025 was as follows (in thousands): Year Ended February 28, 2026 Metal Coatings (1) Precoat Metals Infrastructure Solutions (2) Corporate (3)(4) Total Sales $ 758,709 $ 891,371 $ — $ — $ 1,650,080 Cost of sales 531,089 724,036 — — 1,255,125 Gross margin 227,620 167,335 — — 394,955 Selling, general and administrative (5) 23,982 29,251 130 76,975 130,338 Operating income (loss) 203,638 138,084 (130) (76,975) 264,617 Interest expense — — — (55,650) (55,650) Equity in earnings of unconsolidated subsidiaries (6) — — 209,733 — 209,733 Other income (expense) (43) 18 — 1,640 1,615 Income (loss) before income tax $ 203,595 $ 138,102 $ 209,603 $ (130,985) $ 420,315 See notes on page 23 .
  • Year Ended February 28, 2025 Metal Coatings Precoat Metals Infrastructure Solutions (2) Corporate (3)(4) Total Sales $ 665,107 $ 912,637 $ — $ — $ 1,577,744 Cost of sales 464,260 730,804 — — 1,195,064 Gross margin 200,847 181,833 — — 382,680 Selling, general and administrative (5) 22,372 34,005 6,737 83,202 146,316 Operating income (loss) 178,475 147,828 (6,737) (83,202) 236,364 Interest expense — — — (81,282) (81,282) Equity in earnings of unconsolidated subsidiaries — — 16,163 — 16,163 Other income (expense) 247 — — (809) (562) Income (loss) before income tax $ 178,722 $ 147,828 $ 9,426 $ (165,293) $ 170,683 (1) Fiscal year 2026 includes restructuring charges related to the closure of two surface technology facilities in our Metal Coatings segment of $3.8 million.
  • Financial Statements and Supplementary Data—Note 21." (2) Infrastructure Solutions segment includes the equity in earnings from our investment in the AVAIL JV, as well as other expenses related to receivables and liabilities that were retained following the sale of the AIS business.
  • Fiscal year 2025 includes $6.5 million related to legal matters.
  • (3) Interest expense and Income tax expense are included under the Corporate heading, as these items are not allocated to the segments.
  • (4) Amortization expense for intangible assets are included in Corporate expenses in "Selling, general and administrative" expense as these expenses are not allocated to the segments.
  • (5) Fiscal year 2026 includes stock-based compensation expense recognized upon the adoption of the Executive Retiree LTI Program of $2.2 million, of which $0.4 million and $1.8 million are included in Metal Coatings and Corporate, respectively.
  • Fiscal year 2025 includes an accrual related to a legal settlement and accrual related to a non-operating entity of $3.5 million, as well as retirement and other severance expenses of $3.7 million.
  • (6) During the first quarter of fiscal 2026, AVAIL completed the sale of the Electrical Products Group ("EPG").
  • During the fourth quarter of fiscal 2026, AVAIL completed the sale of the majority of its Welding Services Business ("WSI").
  • Equity in earnings for the year ended February 28, 2026 includes $ 204.5 million, consisting of a net gain related to the sale of the EPG and WSI, partially offset by the recognition of an impairment loss on the AVAIL JV, a prior period adjustment for accounting errors within the Brazil operations of the AVAIL JV, and an adjustment related to a change in AVAIL's transfer pricing policy.
  • Financial Statements and Supplementary Data—Note 18." For the fiscal year ended February 28, 2026, we recorded sales of $1.65 billion, compared to prior year's sales of $1.58 billion.
  • Of total sales for fiscal 2026, 46.0% were generated from the AZZ Metal Coatings segment and 54.0% of sales were generated from the AZZ Precoat Metals segment.
  • Net income for fiscal 2026 was $317.3 million, compared to $128.8 million for fiscal 2025.
  • Net income as a percentage of sales was 19.2% for fiscal 2026 as compared to 8.2% for fiscal 2025.
  • Diluted earnings per common share increased by 486.6%, to $10.50 per share for fiscal 2026, compared to $1.79 per share for fiscal 2025.
  • The increase was primarily due to equity in earnings from the AVAIL JV and the redemption of the Series A Preferred Stock in the prior year.
  • See "Liquidity and Capital Resources—AVAIL JV and —Series A Convertible Preferred Stock." Sales Sales for the AZZ Metal Coatings segment increased $93.6 million, or 14.1%, to $758.7 million, from the prior year's sales of $665.1 million.
  • The increase in sales was primarily due to $110.4 million resulting from higher volume of steel processed, mainly due to increases in the construction, electrical, industrial, and transportation end markets, and an increase in other sales of $1.8 million.
  • The increase was partially offset by a decrease in average selling price of $18.6 million due to product mix.
  • Sales for the AZZ Precoat Metals segment decreased $21.3 million, or 2.3%, to $891.4 million, from the prior year's sales of $912.6 million.
  • The decrease in sales was primarily due to a lower volume of coil coated during fiscal 2026 , mainly due to decreases in construction and transportation end markets.
  • The decrease was partially offset by an increase in average selling price due to vendor price increases that were passed through to the customer.
  • Operating Income Operating income for the AZZ Metal Coatings segment increased $25.2 million, or 14.1%, for fiscal 2026, to $203.6 million, as compared to $178.5 million for the prior year.
  • The increase is primarily due to net increase in sales as described above, offset by higher cost of sales and selling, general and administrative expenses.
  • Cost of sales increased $66.8 million, primarily due to higher sales volumes and an increase in zinc, labor, and overhead costs.
  • The increase in selling, general and administrative expense was primarily due to higher employee related costs.
  • Operating income for the AZZ Precoat Metals segment decreased $9.7 million, or 6.6%, for fiscal 2026, to $138.1 million, as compared to $147.8 million for the prior year.
  • The decrease is primarily due to the decrease in sales as described above, partially offset by a decrease in cost of sales, primarily driven by lower cost of labor and materials (mainly due to lower volume).
  • Selling, general and administrative expense decreased due to lower employee related costs and other indirect costs.
  • Operating loss for the AZZ Infrastructure solutions segment was $0.1 million compared to an operating loss of $6.7 million for the prior year, an improvement of $6.6 million for fiscal 2026.
  • The operating loss was lower due to the prior year recognition of $1.2 million in litigation fees and the write-off of $5.2 million for a disputed receivable that was retained following the sale of the AIS business.

and 457 more.

Gone since FY2025

  • A discussion regarding our financial condition and results of operations as well as our liquidity and capital resources for fiscal year 2024 compared to fiscal year 2023 can be found under "Item 7.
  • Management's Discussion and Analysis" in our Annual Report on Form 10-K for the fiscal year ended February 29, 2024, filed with the SEC on April 22, 2024, which such discussion is hereby incorporated by reference.
  • We operate three distinct business segments, the AZZ Metal Coatings segment, the AZZ Precoat Metals segment, and the AZZ Infrastructure Solutions segment, which consists of the Company's 40% investment in a joint venture, AIS Investment Holdings LLC (the "AVAIL JV").
  • For a reconciliation of segment operating income (loss) from continuing operations to consolidated operating income, see "Item 8.
  • Financial Statements and Supplementary Data—Note 18".
  • For example, the twelve-month period ended February 28, 2025 is referred to as "fiscal 2025," "fiscal year 2025", "current year" or "current period", and the twelve-month period ended February 29, 2024 is referred to as "fiscal 2024," "fiscal year 2024," "prior year" or "prior year period." Business Operations Update Our results for the year ended February 28, 2025 were favorably impacted by the growth in demand for our manufactured solutions, primarily in the construction industry.
  • The demand for our manufactured solutions was the primary contributor to net income available to common shareholders of $52.4 million for the year ended February 28, 2025.
  • Our operating results for fiscal 2025, including operating results by segment, are described in the summary on the following page, and detailed descriptions can be found below under “Results of Operations.” Our operations generated $249.9 million of cash in fiscal 2025.
  • The components of our liquidity and descriptions of our cash flows, capital investments, and other matters impacting our liquidity and capital resources can be found below under “Liquidity and Capital Resources.” Outlook While it is difficult to predict future North American economic activity and its impact on the demand for our galvanizing and coil coating solutions, as well the impact that political or regulatory developments may have on us, we have noted several factors below that have impacted or may impact our results of operations during the first quarter of fiscal 2026. • Sales prices in our AZZ Metal Coatings segment are expected to remain consistent with current levels. • Sales prices in our AZZ Precoat Metals segment are expected to remain consistent with current levels, with expected seasonal fluctuations in mix due to an increase in construction business, which may impact the average selling price. • Demand in our AZZ Metal Coatings and AZZ Precoat Metals segments is expected to follow our typical seasonal patterns. • Customer inventories for our AZZ Metal Coatings segment remain consistent, which should support the continued demand for our metal coatings solutions. • Customer inventories for our AZZ Precoat Metals segment remain at historical levels, which should support the continued demand for our coil coating solutions.
  • Results of Operations Net income (loss) from continuing operations by segment for fiscal 2025 and 2024 were as follows (in thousands): Year Ended February 28, 2025 Metal Coatings (1) Precoat Metals Infrastructure Solutions (2) Corporate (3)(4) Total Sales $ 665,107 $ 912,637 $ — $ — $ 1,577,744 Cost of sales (5) 464,260 730,804 — — 1,195,064 Gross margin 200,847 181,833 — — 382,680 Selling, general and administrative (6) 22,372 34,005 6,737 83,202 146,316 Operating income (loss) from continuing operations 178,475 147,828 (6,737) (83,202) 236,364 Interest expense — — — (81,282) (81,282) Equity in earnings of unconsolidated subsidiaries — — 16,163 — 16,163 Other income (expense) 247 — — (809) (562) Income (loss) from continuing operations before income tax $ 178,722 $ 147,828 $ 9,426 (165,293) 170,683 Income tax expense 41,850 41,850 Net income (loss) from continuing operations $ (207,143) $ 128,833 See notes on page 25 .
  • Year Ended February 29, 2024 Metal Coatings (1) Precoat Metals Infrastructure Solutions (2) Corporate (3)(4) Total Sales $ 656,189 $ 881,400 $ — $ — $ 1,537,589 Cost of sales (5) 465,147 708,981 — — 1,174,128 Gross margin 191,042 172,419 — — 363,461 Selling, general and administrative (6) 26,314 32,848 6,246 76,453 141,861 Operating income (loss) from continuing operations 164,728 139,571 (6,246) (76,453) 221,600 Interest expense — — — (107,065) (107,065) Equity in earnings of unconsolidated subsidiaries — — 15,407 — 15,407 Other income 128 — — 33 161 Income (loss) from continuing operations before income tax $ 164,856 $ 139,571 $ 9,161 (183,485) 130,103 Income tax expense 28,496 28,496 Net income (loss) from continuing operations $ (211,981) $ 101,607 (1) For fiscal year 2024, AZZ Metal Costings included expenses related to a legal matter of $5.5 million in "Selling, general and administrative".
  • (2) Infrastructure Solutions segment includes the equity in earnings from our investment in the AVAIL JV, as well as other expenses related to receivables and liabilities that were retained following the sale of the AIS business.
  • (3) Interest expense and Income tax expense are included in the Corporate segment as these items are not allocated to the segments.
  • (4) For fiscal year 2025, amortization expense for acquired intangible assets of $23.1 million is included in Corporate expenses in "Selling, general and administrative" expense as these expenses are not allocated to the segments.
  • For fiscal year 2024, amortization expense for acquired intangible assets of $ 24.0 million is included in Corporate expenses in "Selling, general and administrative" expense as these expenses are not allocated to the segments.
  • Fiscal year 2024 also includes an accrual related to a legal settlement of $ 5.8 million for the settlement of a litigation matter that was acquired as part of the Precoat Acquisition and relates to the business activities that were discontinued prior to our acquisition.
  • (5) Cost of sales includes direct labor, materials, depreciation, amortization and overhead expenses directly related to providing our metal coatings solutions.
  • (6) Selling, general and administrative includes compensation and benefits costs, professional expenses, insurance, computer, depreciation, amortization and other selling, general and administrative expenses.
  • For the fiscal year ended February 28, 2025, we recorded sales of $1,577.7 million, compared to prior year’s sales of $1,537.6 million.
  • Of total sales for fiscal 2025, 42.2% were generated from the AZZ Metal Coatings segment and 57.8% of sales were generated from the AZZ Precoat Metals segment.
  • Net income from continuing operations for fiscal 2025 was $128.8 million, compared to $101.6 million for fiscal 2024.
  • Net income from continuing operations as a percentage of sales was 8.2% for fiscal 2025 as compared to 6.6% for fiscal 2024.
  • Diluted earnings per common share from continuing operations decreased by 48.3%, to $1.79 per share for fiscal 2025, compared to $3.46 per share for fiscal 2024.
  • The decrease was primarily due to the redemption of the Series A Preferred Stock.
  • See "Liquidity and Capital Resources—Series A Convertible Preferred Stock." Sales Sales for the AZZ Metal Coatings segment increased $8.9 million, or 1.4%, to $665.1 million, from the prior year’s sales of $656.2 million.
  • The increase in sales was primarily due to a higher volume of steel processed which contributed $17.8 million, partially offset by a decrease in selling price, which decreased sales by $4.6 million.
  • In addition, other sales decreased by $4.3 million.
  • Sales for the AZZ Precoat Metals segment increased $31.2 million, or 3.5%, to $912.6 million, from the prior year's sales of $881.4 million.
  • The increase in sales was due to an increase in volume of metal coated during fiscal 2025 compared to the prior year, partially offset by a slight decrease in selling price, due to product mix.
  • Operating Income Operating income for the AZZ Metal Coatings segment increased $13.7 million, or 8.3%, for fiscal 2025, to $178.5 million, as compared to $164.7 million for the prior year.
  • The increase is due to net increase in sales as described above, lower cost of sales and lower selling, general and administrative expenses.
  • Cost of sales decreased $0.9 million, primarily due to a decrease in zinc costs, offset by higher labor and overhead costs.
  • The decrease in selling, general and administrative expense was primarily due to a legal accrual and related expenses of $5.5 million recognized in the prior year.
  • Operating income for the AZZ Precoat Metals segment increased $8.3 million, or 5.9%, for fiscal 2025, to $147.8 million, as compared to $139.6 million for the prior year.
  • The increase is primarily due to the increase in sales as described above, partially offset by an increase in cost of sales, primarily driven by higher cost of labor and materials (mainly due to higher volume).
  • Selling, general and administrative expense increased due to higher employee related costs, travel, other indirect costs.
  • Operating loss for the AZZ Infrastructure solutions segment increased $0.5 million, or 7.9%, for fiscal 2025, to $(6.7) million, as compared to $(6.2) million for the prior year.
  • The increase is due to the recognition of $1.2 million in litigation fees and the write-off of $5.2 million for a disputed receivable that was retained following the sale of the AIS business, following an unfavorable resolution of the litigation matter.
  • Financial Statements and Supplementary Data—Note 22." Corporate Expenses Corporate expenses increased $6.7 million, to $83.2 million for fiscal 2025, compared to $76.5 million for fiscal 2024.
  • The increase is primarily due to: an increase in salaries and wages, due to retirement and other severance expense for certain executive management employees; increased incentive expense, due to improved performance of the Company; an increase in expenses related to the Company's employee stock purchase plan, due to the increase in AZZ's common stock price; a legal settlement and other legal expenses related to a non-operating entity of $3.5 million; and transition services agreement fees associated with the AVAIL JV, which were received in the prior year, with no comparable receipt in the current year.

and 422 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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