AZZ Lifts Full-Year Outlook After First-Quarter Sales Accelerate
The metal coatings and coil-coating company raised its fiscal 2027 sales guidance to as much as $1.85 billion after first-quarter revenue climbed 6.3%.
AZZ Inc. (AZZ), the metal coatings and coil-coating company, reported first-quarter fiscal 2027 sales of $448.5 million, a 6.3% increase from a year earlier, and lifted its full-year guidance across all major metrics.
The acceleration marked a notable shift from the prior year's pace. First-quarter fiscal 2026 revenue had grown just 2.1%, and the third quarter of fiscal 2026 posted 5.5% growth. The stronger start prompted management to raise its fiscal 2027 sales outlook to $1.80 billion to $1.85 billion, up from the $1.725 billion to $1.775 billion range reiterated only one quarter earlier.
Adjusted diluted earnings rose 3.9% to $1.85 a share, a deceleration from the 21.9% jump recorded in the year-ago quarter. GAAP net income fell to $52.0 million from $170.9 million, though the prior-year figure was inflated by a $173.5 million equity pickup from the AVAIL joint venture tied to the sale of the Engineered Products Group to nVent. Consolidated adjusted EBITDA margin narrowed to 22.2% from 25.2%, a 300-basis-point contraction partly attributable to the absence of $7.7 million in AVAIL JV equity earnings that had been included in the year-ago operating results.
Metal Coatings drove the top-line acceleration, with segment sales climbing 12.3% to $210.3 million on higher galvanized-steel volume across construction, industrial, and infrastructure markets. The division continued a streak of double-digit volume-driven growth that ran through all four quarters of fiscal 2026. Segment adjusted EBITDA margin, however, contracted 260 basis points to 30.3%, reflecting the absence of a prior-year land-sale benefit and a mix shift toward larger projects.
Precoat Metals, the company's coil-coating arm, returned to growth for the first time in five quarters. Sales edged up 1.5% to $238.2 million after declines ranging from 0.8% to 4.3% through fiscal 2026. The turnaround was powered by the ramp-up of the Washington, Missouri facility and price pass-throughs, though volume remained soft in construction, infrastructure, HVAC, and appliance end markets. Segment adjusted EBITDA margin expanded 100 basis points to 21.7% on the higher sales base.
The company raised adjusted EBITDA guidance to $375 million to $415 million and adjusted diluted EPS guidance to $6.75 to $7.15, up from prior ranges of $360 million to $400 million and $6.50 to $7.00, respectively. Capital spending guidance of $80 million to $100 million was reiterated, an increase from the $60 million to $80 million budgeted in fiscal 2026, reflecting investment in hot-dip galvanizing capacity expansions.
Interest expense fell 39.3% to $11.3 million, the result of $385.3 million in debt reduction completed during fiscal 2026. The net leverage ratio held at 1.4 times at quarter-end, flat sequentially and down from 1.7 times a year earlier. AZZ also raised its quarterly dividend 20% to $0.24 a share, following a similar increase from $0.17 to $0.20 in the year-ago quarter.