Q3 2026 AZZ Inc Earnings Call

January 8, 2026

Speaker #1: Good day, and welcome to the AZZ Incorporated Quarter Three full-year earnings conference call and webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: Good day, and welcome to the AZZ Incorporated Q3 full-year earnings conference call and webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Philip Cooper with Three Part Advisors. Please go ahead.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on a touch-tone phone.

Speaker #1: To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Philip Cooper.

Speaker #1: With three-part advisors, please go

Speaker #1: ahead. Good

Speaker #2: Good morning. Thank you for joining us today to review AZZ's third quarter fiscal 2026 results for the period ended November 30, 2025. Joining the call today are Tom Ferguson, President and Chief Executive Officer; Jason Crawford, Chief Financial Officer; and David Nark, Chief Marketing Communications and Investor Relations Officer.

Philip Cooper: Good morning. Thank you for joining us today to review AZZ's Q3 fiscal 2026 results for the period ended 30 November 2025. Joining the call today are Tom Ferguson, President and Chief Executive Officer; Jason Crawford, Chief Financial Officer; and David Nark, Chief Marketing, Communications, and Investor Relations Officer. After today's prepared remarks, we will open the call for questions. Please note the live webcast for today's call can be found at www.AZZ.com/investor-events. Before we begin, I would like to remind everyone that our discussion today will include forward-looking statements made in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. By their nature, forward-looking statements are uncertain and outside the company's control.

Phillip Kupper: Good morning. Thank you for joining us today to review AZZ's Q3 fiscal 2026 results for the period ended 30 November 2025. Joining the call today are Tom Ferguson, President and Chief Executive Officer; Jason Crawford, Chief Financial Officer; and David Nark, Chief Marketing, Communications, and Investor Relations Officer. After today's prepared remarks, we will open the call for questions. Please note the live webcast for today's call can be found at www.AZZ.com/investor-events. Before we begin, I would like to remind everyone that our discussion today will include forward-looking statements made in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. By their nature, forward-looking statements are uncertain and outside the company's control.

Speaker #2: After today’s prepared remarks, we will open the call for questions. Please note the live webcast for today’s call can be found at www.azz.com/investor-events. Before we begin, I would like to remind everyone that our discussion today will include forward-looking statements made in accordance with the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.

Speaker #2: By their nature, forward-looking statements are uncertain and outside the company's control. Except for actual results, AZZ's comments containing forward-looking statements may involve risks and uncertainties.

Philip Cooper: Except for actual results, AZZ's comments containing forward-looking statements may involve risks and uncertainties, some of which are detailed from time to time in documents filed by AZZ with the Securities and Exchange Commission, including the latest annual report on Form 10-K. These statements are not guarantees of future performance. Therefore, undue reliance should not be placed upon them. Actual results could differ materially from these expectations. In addition, today's call will discuss non-GAAP financial measures, which should be considered supplemental, not as a substitute for GAAP financial measures. We refer shareholders to our reconciliations from GAAP to non-GAAP measures contained in today's earnings press release. I would now like to turn the call over to Tom Ferguson.

Except for actual results, AZZ's comments containing forward-looking statements may involve risks and uncertainties, some of which are detailed from time to time in documents filed by AZZ with the Securities and Exchange Commission, including the latest annual report on Form 10-K. These statements are not guarantees of future performance. Therefore, undue reliance should not be placed upon them. Actual results could differ materially from these expectations. In addition, today's call will discuss non-GAAP financial measures, which should be considered supplemental, not as a substitute for GAAP financial measures. We refer shareholders to our reconciliations from GAAP to non-GAAP measures contained in today's earnings press release. I would now like to turn the call over to Tom Ferguson.

Speaker #2: Some of which are detailed from time to time in documents filed by AZZ with the Securities and Exchange Commission, including the latest annual report on Form 10-K.

Speaker #2: These statements are not guarantees of future performance; therefore, undue reliance should not be placed upon them. Actual results could differ materially from these expectations.

Speaker #2: In addition, today's call will discuss non-GAAP financial measures, which should be considered supplemental, not as a substitute for GAAP financial measures. For your reference, please refer to our reconciliations from GAAP to non-GAAP measures contained in today's earnings press release.

Speaker #2: I would now like to turn the call over to Tom.

Speaker #2: Ferguson. Thank

Speaker #3: Thank you, Philip. Thank you all for joining us today, and Happy New Year. After I provide a brief overview of our results and an update on what we are seeing across our segments, Jason will cover AZZ's detailed financial results, and Dave will discuss industry dynamics across our end markets.

Tom Ferguson: Thank you, Philip. Thank you all for joining us today, and Happy New Year. After I provide a brief overview of our results and an update on what we are seeing across our segments, Jason will cover AZZ's detailed financial results, and Dave will discuss industry dynamics across our end markets. First, let me share a couple of important milestones. We achieved record sales of $426 million in the third quarter, surpassing any quarter in our company's history. We had a record high trailing 12-month Adjusted EBITDA of $358 million. These financial results reflect our unwavering commitment to execute on our disciplined strategy that focuses on driving growth and creating shareholder value. This quarter, we maintained our cash dividend of $0.20 per share, marking 63 consecutive quarters of consistently returning capital to our shareholders through cash dividends.

Thomas Ferguson: Thank you, Philip. Thank you all for joining us today, and Happy New Year. After I provide a brief overview of our results and an update on what we are seeing across our segments, Jason will cover AZZ's detailed financial results, and Dave will discuss industry dynamics across our end markets. First, let me share a couple of important milestones. We achieved record sales of $426 million in the third quarter, surpassing any quarter in our company's history. We had a record high trailing 12-month Adjusted EBITDA of $358 million. These financial results reflect our unwavering commitment to execute on our disciplined strategy that focuses on driving growth and creating shareholder value. This quarter, we maintained our cash dividend of $0.20 per share, marking 63 consecutive quarters of consistently returning capital to our shareholders through cash dividends.

Speaker #3: First, let me share a couple of important milestones. We achieved record sales of $426 million in the third quarter, surpassing any quarter in our company's history.

Speaker #3: And we had a record high trailing 12-month adjusted EBITDA of $358 million. These financial results reflect our unwavering commitment to execute on our disciplined strategy that focuses on driving growth and creating shareholder value.

Speaker #3: This quarter, we maintained our cash dividend of $0.20 per share, marking 63 consecutive quarters of consistently returning capital to our shareholders through cash dividends.

Speaker #3: Now, turning to our third quarter results, we grew total sales by 5.5% and generated a robust adjusted EBITDA of more than $91 million. Metal Coatings delivered an exceptional quarter, with sales rising 15.7% year over year.

Tom Ferguson: Now, turning to our Q3 results, we grew total sales by 5.5% and generated a robust adjusted EBITDA of more than $91 million. Metal Coating has delivered an exceptional quarter, with sales rising 15.7% year over year, fueled by higher volumes and strong demand from infrastructure projects. Segment EBITDA margins of 30.3% reflect an increased mix of larger projects in electrical, solar, and transmission and distribution work, which tend to be more price competitive. Precoat Metals delivered sequential improvement over the prior quarter, though sales were down 1.8% year over year. This was primarily the result of continued softness in construction, HVAC, and transportation markets. Meanwhile, food and beverage container demand reached new record highs, driven by new customer acquisitions and market share gains. This trend further underscores the accelerated shift from plastics to aluminum, which aligns with the ongoing ramp-up at our new Washington, Missouri facility.

Now, turning to our Q3 results, we grew total sales by 5.5% and generated a robust adjusted EBITDA of more than $91 million. Metal Coating has delivered an exceptional quarter, with sales rising 15.7% year over year, fueled by higher volumes and strong demand from infrastructure projects. Segment EBITDA margins of 30.3% reflect an increased mix of larger projects in electrical, solar, and transmission and distribution work, which tend to be more price competitive. Precoat Metals delivered sequential improvement over the prior quarter, though sales were down 1.8% year over year. This was primarily the result of continued softness in construction, HVAC, and transportation markets. Meanwhile, food and beverage container demand reached new record highs, driven by new customer acquisitions and market share gains. This trend further underscores the accelerated shift from plastics to aluminum, which aligns with the ongoing ramp-up at our new Washington, Missouri facility.

Speaker #3: Fueled by higher volumes and strong demand from infrastructure projects. Segment EBITDA margins of 30.3% reflect an increased mix of larger projects in electrical, solar, and transmission and distribution work, which tend to be more price—delivered sequential improvement over the prior quarter, though sales were down 1.8% year over year.

Speaker #3: This was primarily the result of continued softness in construction, HVAC, and transportation markets. Meanwhile, food and beverage container demand reached new record highs, driven by new customer acquisitions and market share gains.

Speaker #3: This trend further underscores the accelerated shift from plastics to aluminum, which aligns with the ongoing ramp-up at our new Washington, Missouri facility. Overall, the increase in end market demand was driven by growth in infrastructure modernization, energy transition, and industrial reshoring, along with data center construction, integrated LNG power generation, and renewable energy projects.

Tom Ferguson: Overall, the increase in end market demand was driven by growth in infrastructure modernization, energy transition, and industrial reshoring, along with data center construction, integrated LNG power generation, and renewable energy projects. These market sectors depend on galvanized steel and coated materials, areas where AZZ offers unmatched scale, coating solutions expertise, and exclusive technologies to deliver exceptional value to our customers. Our diversified portfolio positions us uniquely to seize project opportunities across multiple end markets. Dave will share more details on this in a moment. We continue to emphasize AZZ's proprietary ERP platform as a core differentiator within our business model. Our Digital Galvanizing System and CoilZone platforms deepen customer relationships and reinforce our competitive moat while providing durable returns on invested capital. Operationally, the systems are margin-enhancing through higher throughput, improved yields, better zinc utilization, improved administrative and production efficiencies, and increased customer connectivity.

Overall, the increase in end market demand was driven by growth in infrastructure modernization, energy transition, and industrial reshoring, along with data center construction, integrated LNG power generation, and renewable energy projects. These market sectors depend on galvanized steel and coated materials, areas where AZZ offers unmatched scale, coating solutions expertise, and exclusive technologies to deliver exceptional value to our customers. Our diversified portfolio positions us uniquely to seize project opportunities across multiple end markets. Dave will share more details on this in a moment. We continue to emphasize AZZ's proprietary ERP platform as a core differentiator within our business model. Our Digital Galvanizing System and CoilZone platforms deepen customer relationships and reinforce our competitive moat while providing durable returns on invested capital. Operationally, the systems are margin-enhancing through higher throughput, improved yields, better zinc utilization, improved administrative and production efficiencies, and increased customer connectivity.

Speaker #3: These market sectors depend on galvanized steel and coated materials, areas where AZZ offers unmatched scale, coating solutions expertise, and exclusive technologies to deliver exceptional value to our customers.

Speaker #3: Our diversified portfolio positions us uniquely to seize project opportunities across multiple end markets. Dave will share more details on this in a moment. We continued to emphasize AZZ's proprietary ERP platform as a core differentiator within our business model.

Speaker #3: Our digital galvanizing system and Coil Zone platforms deepen customer relationships and reinforce our competitive moat, while providing durable returns on invested capital. Operationally, the systems are margin-enhancing through higher throughput, improved yields, better zinc utilization, improved administrative and production efficiencies, and increased customer connectivity.

Speaker #3: Importantly, these benefits are achieved with limited incremental capital, making our technology investments highly accretive to ROIC while also reducing waste and supporting more sustainable operations.

Tom Ferguson: Importantly, these benefits are achieved with limited incremental capital, making our technology investments highly accretive to ROIC while also reducing waste and supporting more sustainable operations. Subsequent to quarter-end, AVAIL completed the sale of a majority interest in its welding solutions business, which they refer to as WSI. The transaction creates value for shareholders and further simplifies AVAIL's portfolio. Our joint venture partner remains focused on completing additional divestitures, with only the Rig-A-Lite and a small portion of international WSI business left. With that, I will turn it over to Jason.

Importantly, these benefits are achieved with limited incremental capital, making our technology investments highly accretive to ROIC while also reducing waste and supporting more sustainable operations. Subsequent to quarter-end, AVAIL completed the sale of a majority interest in its welding solutions business, which they refer to as WSI. The transaction creates value for shareholders and further simplifies AVAIL's portfolio. Our joint venture partner remains focused on completing additional divestitures, with only the Rig-A-Lite and a small portion of international WSI business left. With that, I will turn it over to Jason.

Speaker #3: Subsequent to quarter end, AVAIL completed the sale of a majority interest in its welding solutions business, which they refer to as WSI. The transaction creates value for shareholders and further simplifies AVAIL's portfolio.

Speaker #3: On completing additional divestitures with our joint venture partner, we remain focused only on Rigolite and a small portion of the international WSI business left. With that, I will turn it over to Jason.

Speaker #1: Thank you, Tom. For the third quarter, we reported record sales of $425.7 million, representing a 5.5% increase from $403.7 million in the prior year period.

Jason Crawford: Thank you, Tom. For the third quarter, we reported record sales of $425.7 million, representing a 5.5% increase from $403.7 million in the prior year period. The growth was led by our metal coating segment, where sales increased 15.7% year over year, driven by higher volumes and infrastructure-related spending across our largest verticals. Although Precoat metal sales improved sequentially from last quarter, sales were down 1.8% from the same quarter of the prior year due to an overall weaker end market environment, driven by lower volumes in construction, HVAC, and transportation, partially offset by residential reroofing and stronger food and beverage container sales. Within Precoat metal, excess imported pre-painted metal has worked its way through the market, and with tariffs likely to remain in place, we anticipate Precoat metals will start to benefit from the replacement of pre-painted metal imports.

Speaker #1: The growth was led by our Metal Coatings segment, where sales increased 15.7% year over year, driven by higher volumes in infrastructure-related spending across our largest verticals.

Speaker #1: Although Preco Metal sales improved sequentially from last quarter, sales were down 1.8% from the same quarter of the prior year due to an overall weaker end market environment.

Speaker #1: Driven by lower volumes in construction, HVAC, and transportation, partially offset by residential reroofing and stronger food and beverage container sales. Within Precoat Metals, excess imported prepainted metal has worked its way through the market, and with tariffs likely to remain in place, we anticipate Precoat Metals will start to benefit from the replacement of prepainted metal imports.

Speaker #1: The company's third quarter gross profit was $101.9 million, or 23.9% of sales, compared to $97.8 million, or 24.2% of sales, in the same quarter of the prior year.

Jason Crawford: The company's Q3 gross profit was $101.9 million, or 23.9% of sales, compared to $97.8 million or 24.2% of sales in the same quarter of the prior year. Selling, general, and administrative expenses totaled $32.5 million in Q3, or 7.6% of sales. This compares favorably to last year's Q3, which was $39.2 million or 9.7% of sales, which included costs associated with severance and one-off employee retirement expenses. Operating income for the quarter was $69.5 million or 16.3% of sales, a 180 basis points improvement compared with $58.5 million or 14.5% of sales in the prior year Q3, due to operational improvements this year and non-recurring items included in last year's Q3 results. For Q3, we reported a net loss in equity and earnings of $1.4 million.

The company's Q3 gross profit was $101.9 million, or 23.9% of sales, compared to $97.8 million or 24.2% of sales in the same quarter of the prior year. Selling, general, and administrative expenses totaled $32.5 million in Q3, or 7.6% of sales. This compares favorably to last year's Q3, which was $39.2 million or 9.7% of sales, which included costs associated with severance and one-off employee retirement expenses. Operating income for the quarter was $69.5 million or 16.3% of sales, a 180 basis points improvement compared with $58.5 million or 14.5% of sales in the prior year Q3, due to operational improvements this year and non-recurring items included in last year's Q3 results. For Q3, we reported a net loss in equity and earnings of $1.4 million.

Speaker #1: Selling, general, and administrative expenses totaled $32.5 million in the third quarter, or 7.6% of sales. This compares favorably to last year's third quarter, which was $39.2 million, or 9.7% of sales, and included costs associated with severance and one-off employee retirement expenses.

Speaker #1: Operating income for the quarter was $69.5 million, or 16.3% of sales, a 180 basis point improvement compared with $58.5 million, or 14.5% of sales, in the prior year third quarter.

Speaker #1: Due to operational improvements this year and non-recurring items included in last year's third quarter results. For the third quarter, we reported a net loss in equity and earnings of $1.4 million; this was after recording a $0.6 million post-closing loss adjustment on the previously announced divestiture of the electrical products business.

Jason Crawford: This was after recording $0.6 million post-closing loss adjustment on the previously announced divestiture of the electrical products business. Losses in the quarter from our AVAIL joint venture are primarily due to the excess overhead costs resulting from this divestiture. Compared to Q3 of last year, equity and earnings were $8.6 million lower. With the sale of WSI on 31 December 2025, and progress in resizing AVAIL's overhead costs, we are forecasting equity and earnings from unconsolidated subsidiaries to be zero for Q4 of this year. Interest expense for Q3 was $12.2 million, representing a $7 million improvement from the prior year, driven by a combination of actions including debt pay down, debt repricing, and the introduction of the accounts receivable securitization facility.

This was after recording $0.6 million post-closing loss adjustment on the previously announced divestiture of the electrical products business. Losses in the quarter from our AVAIL joint venture are primarily due to the excess overhead costs resulting from this divestiture. Compared to Q3 of last year, equity and earnings were $8.6 million lower. With the sale of WSI on 31 December 2025, and progress in resizing AVAIL's overhead costs, we are forecasting equity and earnings from unconsolidated subsidiaries to be zero for Q4 of this year. Interest expense for Q3 was $12.2 million, representing a $7 million improvement from the prior year, driven by a combination of actions including debt pay down, debt repricing, and the introduction of the accounts receivable securitization facility.

Speaker #1: Losses in the quarter from our AVAIL joint venture are primarily due to the excess overhead costs resulting from this divestiture. Compared to the third quarter of last year, equity and earnings were $8.6 million lower.

Speaker #1: With the sale of WSI on December 31, 2025, and progress in resizing AVAIL's overhead costs, we are forecasting equity and earnings from unconsolidated subsidiaries to be zero for the fourth quarter of this year.

Speaker #1: Interest expense for the third quarter was $12.2 million, representing a $7 million improvement from the prior year. This was driven by a combination of actions, including debt paydown, debt repricing, and the introduction of the accounts receivable securitization facility.

Speaker #1: The current quarter income tax expense was $14.5 million, reflecting an effective tax rate of 26.1%, compared to a 26.5% tax rate in the prior year's third quarter.

Jason Crawford: The current quarter income tax expense was $14.5 million, reflecting an effective tax rate of 26.1% compared to 26.5% tax rate in the prior year's third quarter. We do not expect the One Big Beautiful Bill Act to have any material impact on our income tax expense or effective tax rate for the year; however, it will reduce our cash taxes paid in 2026. Reported net income for the third quarter was $41.1 million compared to $33.6 million for the third quarter of the prior year. AZZ reported adjusted net income of $46 million, which excludes the amortization of intangible assets of $5.8 million and the AVAIL equity loss adjustment of $0.6 million, or adjusted diluted EPS of $1.52.

The current quarter income tax expense was $14.5 million, reflecting an effective tax rate of 26.1% compared to 26.5% tax rate in the prior year's third quarter. We do not expect the One Big Beautiful Bill Act to have any material impact on our income tax expense or effective tax rate for the year; however, it will reduce our cash taxes paid in 2026. Reported net income for the third quarter was $41.1 million compared to $33.6 million for the third quarter of the prior year. AZZ reported adjusted net income of $46 million, which excludes the amortization of intangible assets of $5.8 million and the AVAIL equity loss adjustment of $0.6 million, or adjusted diluted EPS of $1.52.

Speaker #1: We do not expect the One Big Beautiful Bill Act to have any material impact on our income tax expense. However, it will reduce our cash taxes or effective tax rate for the year.

Speaker #1: Paid in 2026. Reported net income for the third quarter was $41.1 million, compared to $33.6 million for the third quarter of the prior year.

Speaker #1: AZZ reported adjusted net income of $46 million, which excludes the amortization of intangible assets of $5.8 million and the AVAIL equity loss adjustment of $0.6 million, or adjusted diluted EPS of $1.52.

Speaker #1: This compares favorably to the prior year's adjusted net income of $41.9 million and adjusted diluted EPS of $1.39, an increase of 9.4% compared to the third quarter of the prior year.

Jason Crawford: This compares favorably to the prior year's adjusted net income of $41.9 million and adjusted diluted EPS of $1.39, an increase of 9.4% compared to the third quarter of the prior year. Third quarter adjusted EBITDA was $91.2 million or 21.4% of sales, compared to $90.7 million or 22.5% of sales for the same period last year. Turning to our financial position and balance sheet, our strategy for deploying cash flow includes investing in high-return organic and inorganic initiatives, paying down debt, returning capital to our shareholders through our quarterly cash dividend, and buying back our stock. During the third quarter, we generated cash flow from operations of $79.7 million. Capital expenditures for the quarter were $18.5 million, which included a combination of sustaining and growth capital.

This compares favorably to the prior year's adjusted net income of $41.9 million and adjusted diluted EPS of $1.39, an increase of 9.4% compared to the third quarter of the prior year. Third quarter adjusted EBITDA was $91.2 million or 21.4% of sales, compared to $90.7 million or 22.5% of sales for the same period last year. Turning to our financial position and balance sheet, our strategy for deploying cash flow includes investing in high-return organic and inorganic initiatives, paying down debt, returning capital to our shareholders through our quarterly cash dividend, and buying back our stock. During the third quarter, we generated cash flow from operations of $79.7 million. Capital expenditures for the quarter were $18.5 million, which included a combination of sustaining and growth capital.

Speaker #1: Third quarter adjusted EBITDA was $91.2 million, or 21.4% of sales, compared to $90.7 million, or 22.5% of sales, for the same period last year.

Speaker #1: Turning to our financial position and balance sheet, our strategy for deploying cash flow includes investing in high-return organic and inorganic initiatives, paying down debt, returning capital to our shareholders through our quarterly cash dividend, and buying back our stock.

Speaker #1: During the third quarter, we generated cash flow from operations of $79.7 million. Capital expenditures for the quarter were $18.5 million, which included a combination of sustaining and growth capital.

Speaker #1: Stock repurchases for the third quarter were $20 million, at an average price of $99.28 per share, while cash taxes were higher in the quarter, associated with the previously mentioned AVAIL joint venture gain, offset somewhat by the impact of the One Big Beautiful Bill Act.

Jason Crawford: Stock repurchases for the third quarter were $20 million at an average price of $99.28 per share, while cash taxes were higher in the quarter associated with the previously mentioned AVAIL joint venture gain, offset somewhat by the impact of the One Big Beautiful Bill Act. We ended the quarter with a net debt position of $534.7 million and $337.1 million in available borrowing capacity, consisting of $336.4 million in the company's revolving credit facility and $0.6 million in cash and cash equivalents. After paying down $35 million of debt in the quarter, our credit agreement net leverage ratio was 1.6x, which is within our previously announced target range of 1.5x to 2.5x. Finally, as Tom mentioned, over the same period last year, we increased and paid a quarterly cash dividend of $0.20 per share, up from $0.17 per share.

Stock repurchases for the third quarter were $20 million at an average price of $99.28 per share, while cash taxes were higher in the quarter associated with the previously mentioned AVAIL joint venture gain, offset somewhat by the impact of the One Big Beautiful Bill Act. We ended the quarter with a net debt position of $534.7 million and $337.1 million in available borrowing capacity, consisting of $336.4 million in the company's revolving credit facility and $0.6 million in cash and cash equivalents. After paying down $35 million of debt in the quarter, our credit agreement net leverage ratio was 1.6x, which is within our previously announced target range of 1.5x to 2.5x. Finally, as Tom mentioned, over the same period last year, we increased and paid a quarterly cash dividend of $0.20 per share, up from $0.17 per share.

Speaker #1: We ended the quarter with a net debt position of $534.7 million and $337.1 million in available borrowing capacity, consisting of $336.4 million in the company's revolving credit facility and $0.6 million in cash and cash equivalents.

Speaker #1: After paying down $35 million of debt in the quarter, our credit agreement net leverage ratio was 1.6 times, which is within our previously announced target range of 1.5 to 2.5 times.

Speaker #1: And finally, as Tom mentioned, over the same period last year, we increased and paid our quarterly cash dividend of $0.20 per share, up from $0.17 per share.

Speaker #1: With that, I'll turn the call over to David.

Jason Crawford: With that, I'll turn the call over to David.

With that, I'll turn the call over to David.

Speaker #2: Thank you, Jason. Good morning, everyone. The U.S. infrastructure investment cycle, along with an intense wave of investments in generative AI and machine learning technologies, is in the early stages of driving demand for high-power density and advanced cooling systems.

Tom Ferguson: Thank you, Jason. Good morning, everyone. The US infrastructure investment cycle, along with an intense wave of investments in generative AI and machine learning technologies, is in the early stages of driving demand for high-power density and advanced cooling systems. These hyperscale data centers require coatings that extend well beyond just structural steel and transmission poles. For example, these projects require specialized coatings for critical applications, including corrosion protection, aesthetics, functionality, fire safety, and regulatory compliance. Massive data center investments are typically paired, by necessity, with co-located power generation and grid upgrades, which are multi-year construction projects. We expect these private and public co-location investments will reinforce a positive long-term secular trend benefiting both AZZ metal coatings and AZZ Precoat metals. We also expect solar projects to remain strong, as many of our solar customers have backlogs that extend well past the expiration of the current tax credits.

David Nark: Thank you, Jason. Good morning, everyone. The US infrastructure investment cycle, along with an intense wave of investments in generative AI and machine learning technologies, is in the early stages of driving demand for high-power density and advanced cooling systems. These hyperscale data centers require coatings that extend well beyond just structural steel and transmission poles. For example, these projects require specialized coatings for critical applications, including corrosion protection, aesthetics, functionality, fire safety, and regulatory compliance. Massive data center investments are typically paired, by necessity, with co-located power generation and grid upgrades, which are multi-year construction projects. We expect these private and public co-location investments will reinforce a positive long-term secular trend benefiting both AZZ metal coatings and AZZ Precoat metals. We also expect solar projects to remain strong, as many of our solar customers have backlogs that extend well past the expiration of the current tax credits.

Speaker #2: These hyperscale data centers require coatings that extend well beyond just structural steel and transmission poles. For example, these projects require specialized coatings for critical applications, including corrosion protection, aesthetics, functionality, fire safety, and regulatory compliance.

Speaker #2: Massive data center investments are typically paired, by necessity, with co-located power generation and grid upgrades, which are multi-year construction projects. We expect these private and public co-location investments will reinforce a positive, long-term secular trend, benefiting both AZZ Metal Coatings and AZZ Precoat Metals.

Speaker #2: We also expect solar projects to remain strong, as many of our solar customers have backlogs that extend well past the expiration of the current tax credits.

Speaker #2: These projects are focused on large-scale sites, including data centers being developed commercially, that provide power for continuous, high-load requirements. Excluding data centers, non-residential construction remains subdued in the quarter, primarily driven by interest rate and lingering tariff-related uncertainty.

Tom Ferguson: These projects are focused on large-scale sites, including data centers being developed commercially that provide power for continuous high-load requirements. Excluding data centers, non-residential construction remained subdued in the quarter, primarily driven by interest rate, and lingering tariff-related uncertainty, while residential construction was also soft. Despite this, we saw positive trends in the metal residential reroofing market as it continues to gradually take share from the asphalt roofing market. This helped offset a slower-than-normal storm season, as no named hurricanes made landfall in the Continental United States in the current year. Looking ahead, most forecasts point to flat to regionally selective modest growth in construction through calendar year 2026. Finally, as we progress through our fourth quarter, it's worth noting that last year's fourth quarter was impacted by unusually wet and cold weather.

These projects are focused on large-scale sites, including data centers being developed commercially that provide power for continuous high-load requirements. Excluding data centers, non-residential construction remained subdued in the quarter, primarily driven by interest rate, and lingering tariff-related uncertainty, while residential construction was also soft. Despite this, we saw positive trends in the metal residential reroofing market as it continues to gradually take share from the asphalt roofing market. This helped offset a slower-than-normal storm season, as no named hurricanes made landfall in the Continental United States in the current year. Looking ahead, most forecasts point to flat to regionally selective modest growth in construction through calendar year 2026. Finally, as we progress through our fourth quarter, it's worth noting that last year's fourth quarter was impacted by unusually wet and cold weather.

Speaker #2: While residential construction was also soft, despite this, we saw positive trends in the metal.

Speaker #1: A slower normal storm season helped offset this, as no named hurricanes made landfall in the continental United States this current year. In the forecasts.

Speaker #1: regionally modest ahead , year 2026 . point to we Looking Finally , as construction through calendar progress selective growth in fourth quarter , it's worth noting that last year's fourth quarter was impacted unusually wet and by cold weather .

Speaker #1: Prolonged temperatures below 40 degrees and gas curtailment actions by utility providers led to a record number of lost production days, compared to the prior year quarter, particularly in Texas.

Tom Ferguson: Prolonged temperatures below 40 degrees Fahrenheit and gas curtailment actions by utility providers led to a record number of lost production days in the prior year quarter, particularly in Texas. Therefore, we anticipate our fourth quarter may present somewhat easier year-over-year comparisons to last year's December through February period. With that, I will turn the call back over to Tom.

Prolonged temperatures below 40 degrees Fahrenheit and gas curtailment actions by utility providers led to a record number of lost production days in the prior year quarter, particularly in Texas. Therefore, we anticipate our fourth quarter may present somewhat easier year-over-year comparisons to last year's December through February period. With that, I will turn the call back over to Tom.

Speaker #1: Therefore , we anticipate our fourth quarter may present easier year over somewhat year comparisons to year's last December through February to will turn the call Dave with that , I Tom back over .

Speaker #1: Thank you period , Turning to our . fiscal 2026 guidance update , we have forecast narrowed the ranges for sales total , EBITDA and adjusted EPs .

Tom Ferguson: Thank you, Dave. Turning to our fiscal 2026 guidance update, we have narrowed the forecast ranges for total sales, EBITDA, and adjusted EPS. We anticipate that our sales will be in the range of $1.625 to $1.7 billion. Adjusted EBITDA will be in the range of $360 million to $380 million. Adjusted diluted earnings per share will be in the range of $5.90 to $6.20. As Dave mentioned, we believe that last year's fourth quarter weather-related impacts will be less severe. Our strong financial and market positions enable us to capitalize on strategic growth opportunities while executing on our broader capital allocation plans. We expect to release fiscal 2027 guidance in the next few weeks for our new year starting 1 March.

Thomas Ferguson: Thank you, Dave. Turning to our fiscal 2026 guidance update, we have narrowed the forecast ranges for total sales, EBITDA, and adjusted EPS. We anticipate that our sales will be in the range of $1.625 to $1.7 billion. Adjusted EBITDA will be in the range of $360 million to $380 million. Adjusted diluted earnings per share will be in the range of $5.90 to $6.20. As Dave mentioned, we believe that last year's fourth quarter weather-related impacts will be less severe. Our strong financial and market positions enable us to capitalize on strategic growth opportunities while executing on our broader capital allocation plans. We expect to release fiscal 2027 guidance in the next few weeks for our new year starting 1 March.

Speaker #1: We anticipate that our sales will be in the range of $1.625 to $1.7 billion, adjusted EBITDA will be in the range of $360 million to $380 million, and adjusted diluted earnings per share will be in the range of $5.90 to $6.20.

Speaker #1: As mentioned, Dave, we believe that last year's fourth quarter, weather-related impacts will be less severe. Our strong financial and market positions enable us to capitalize on strategic growth opportunities while executing broader on our capital allocation plans.

Speaker #1: We expect to . Release fiscal in the next few 2027 guidance for our New weeks year , starting March 1st . Consolidation in the industry continues to present compelling opportunities , and we're currently evaluating several strategic tuck in acquisitions that align with our playbook and expand our market reach in coatings and precoat metal metals .

Tom Ferguson: Consolidation in the industry continues to present compelling opportunities, and we are currently evaluating several strategic tuck-in acquisitions that align with our playbook and expand our market reach in metal coatings and Precoat metals. We continue to take a disciplined approach to M&A, targeting opportunities to drive sustainable growth and generate meaningful value for shareholders. Finally, I want to sincerely thank our AZZ team for their unwavering dedication, disciplined focus, and the pride and passion they bring every day to deliver exceptional quality, service, and value creation to our customers and other stakeholders. Now, operator, we would like to open the call for questions.

Consolidation in the industry continues to present compelling opportunities, and we are currently evaluating several strategic tuck-in acquisitions that align with our playbook and expand our market reach in metal coatings and Precoat metals. We continue to take a disciplined approach to M&A, targeting opportunities to drive sustainable growth and generate meaningful value for shareholders. Finally, I want to sincerely thank our AZZ team for their unwavering dedication, disciplined focus, and the pride and passion they bring every day to deliver exceptional quality, service, and value creation to our customers and other stakeholders. Now, operator, we would like to open the call for questions.

Speaker #1: We continue to take a disciplined approach to M&A targeting opportunities to drive sustainable growth and generate meaningful value for shareholders . Finally , I want to sincerely thank our team for their unwavering dedication , discipline , focus and the pride and passion they bring every day to deliver exceptional quality , service and value to our customers and other stakeholders .

Speaker #1: Now, operator, we would like to open the call for questions.

Speaker #2: We will now begin the question and answer session to ask a question . You may press star , then one on your touch tone phone .

Speaker #2: If you're using a speakerphone , please pick up your handset before pressing the keys . If time at any question has been your would like to withdraw your question , please addressed and you press star then two .

Operator: We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Ghansham Panjabi with Baird. Please go ahead.

Speaker #2: At this time, we will pause momentarily to assemble our roster. The first question comes from Ghansham Panjabi with Baird. Please go ahead.

Speaker #3: Thank you . Operator . Good morning , everybody , and happy New Year to you . I guess first off , on the metal coatings segment and also Precoat , can you just give us a sense as to how your order backlogs have up shaped in context of some of the complications of the operating the backdrop with government shutdown on and so forth .

Ghansham Panjabi: Thank you, operator. Good morning, everybody, and happy New Year to you. You know, I guess first off on the metal coating segment and also Precoat, can you just give us a sense as to how your order backlogs have shaped up, in context of, you know, some of the complications of the operating backdrop with the government shutdown and so on and so forth? And just specific to the government shutdown, did it have any material impact on you in either of those two segments?

Speaker #3: And just specific to the government shutdown, did it have any material impact on you in either of those two segments?

Speaker #1: Yeah . Thanks . And happy New Year . I think as we've discussed , typically on on the metal coating side , we really don't have much backlog .

Tom Ferguson: Yeah, thanks, and happy New Year. I think as we've discussed, typically on the metal coating side, we really don't have much backlog. But we do have, you know, a good forward look from our sales organization, in terms of what our customers are, what their outlooks are. So we feel really good at this point, as we look at finishing the year. That's why, unless weather gets really ugly, as it did last year, we think metal coatings has the momentum and opportunities to have a really good finish to the year. So feeling really good about that. And it's both, as we've mentioned, the big projects, a lot of opportunities. It's whether it's data centers, whether it's solar plants, transmission distribution, a lot of the pole business, and towers.

Thomas Ferguson: Yeah, thanks, and happy New Year. I think as we've discussed, typically on the metal coating side, we really don't have much backlog. But we do have, you know, a good forward look from our sales organization, in terms of what our customers are, what their outlooks are. So we feel really good at this point, as we look at finishing the year. That's why, unless weather gets really ugly, as it did last year, we think metal coatings has the momentum and opportunities to have a really good finish to the year. So feeling really good about that. And it's both, as we've mentioned, the big projects, a lot of opportunities. It's whether it's data centers, whether it's solar plants, transmission distribution, a lot of the pole business, and towers.

Speaker #1: We've got . But we do have a , you know , a good forward look from our our sales organization in terms of what our customers are , what their outlooks are .

Speaker #1: So we feel really good at this point as we as look at finishing the year . That's why unless weather gets really , really ugly , as it did last year , we think metal Coatings has the momentum and and opportunities to to have have a really good finish to the year .

Speaker #1: So feeling really good about that . And it's it's both as we've as mentioned , the big projects a lot of opportunities . It's whether it's data centers , whether it's solar plants , transmission distribution , a lot of the pole business and towers .

Speaker #1: It's just all really active, particularly in a lot of the areas that we've got. Good capacity on the Precoat side, much more of a mixed bag.

Tom Ferguson: It's just all really active, particularly in a lot of the areas that we've got good capacity. On the Precoat side, much more of a mixed bag. I think, you know, didn't feel anything from the government shutdown to speak of on either side, just to get that out there. But on Precoat, yeah, they're more challenged with residential, commercial construction. They are getting, you know, benefiting from some of the data centers, a lot of painted metal on those. But and then in terms of roofing, it's more the conversions as houses are putting new roofs on. They're more and more of them are moving to metal, which is good for us, but it's not enough to offset the market, call it the market headwinds.

It's just all really active, particularly in a lot of the areas that we've got good capacity. On the Precoat side, much more of a mixed bag. I think, you know, didn't feel anything from the government shutdown to speak of on either side, just to get that out there. But on Precoat, yeah, they're more challenged with residential, commercial construction. They are getting, you know, benefiting from some of the data centers, a lot of painted metal on those. But and then in terms of roofing, it's more the conversions as houses are putting new roofs on. They're more and more of them are moving to metal, which is good for us, but it's not enough to offset the market, call it the market headwinds.

Speaker #1: think I , you know , didn't didn't feel anything from the government shutdown to speak of on , on side either just to get that out there .

Speaker #1: But on Precoat . Yeah , they're , they're , they're more challenged with residential commercial construction . They are getting , you know , from some benefiting of the data centers , a lot of pain and metal on , those .

Speaker #1: But and then in terms of roofing , it's more the , you know , conversions as houses are putting new roofs on their more and more of them are moving to which is metal , good for us .

Speaker #1: But it's not enough to the , offset the market , the market headwinds . So they and don't really backlog they do have a lot of bare metal either , but and the bare metal is lower than than than , at this time last year .

Tom Ferguson: So, they don't really have backlog either, but they do have a lot of bare metal, and the bare metal is lower than at this time last year. So they're chasing stuff that's going to be quicker turn to maintain their sales levels.

So, they don't really have backlog either, but they do have a lot of bare metal, and the bare metal is lower than at this time last year. So they're chasing stuff that's going to be quicker turn to maintain their sales levels.

Speaker #1: So they're chasing stuff that's that's going to be quicker . Turn to to maintain their sales levels .

Speaker #3: Got it . And then specific to Precoat , Tom , I mean , you know , obviously a lot of distortions in order patterns last year with tariffs and you know , the adjustments in imports and so on and so forth , is the underlying operating environment worsening as we head into fiscal year 20 , you know , into year calendar 26 , or is it just at a low point and there's no recovery on a consolidated basis , given the ups and downs .

Ghansham Panjabi: Got it. Then specific to Precoat, Tom, I mean, you know, obviously, a lot of distortions in order patterns last year with tariffs and, you know, the adjustments in imports and so on and so forth. Is the underlying operating environment worsening, as we head into fiscal year 2025, you know, into calendar year 2026, or is it just at a low point and there's no recovery on a consolidated basis given the ups and downs, you know, across the businesses you called out?

Speaker #3: know , across You , you the business , as you called out ?

Speaker #1: I No , got a couple of things going on think you , some of our control , some of which which isn't . But I think we believe the have pretty much bottomed and And so stabilizing .

Tom Ferguson: No, I think you got a couple of things going on, some of which is in our control, some of which is, which isn't. But I think we believe the markets have pretty much bottomed and stabilizing, and so we're seeing opportunities. And of course, we're going after more. We're winning some market share, that's out there to offset the market softness. But then we've got the Washington plant ramping up, and that is one of the areas where we are seeing opportunities, in the container. And you know, as we continue to talk about plastics converting to aluminum, that's just you know, we probably couldn't have opened up new capacity for the container business at any better time.

Thomas Ferguson: No, I think you got a couple of things going on, some of which is in our control, some of which is, which isn't. But I think we believe the markets have pretty much bottomed and stabilizing, and so we're seeing opportunities. And of course, we're going after more. We're winning some market share, that's out there to offset the market softness. But then we've got the Washington plant ramping up, and that is one of the areas where we are seeing opportunities, in the container. And you know, as we continue to talk about plastics converting to aluminum, that's just you know, we probably couldn't have opened up new capacity for the container business at any better time.

Speaker #1: we're we're seeing opportunities . And of course , we're we're going after more . We're winning some market share that's out there to to offset the , the market softness .

Speaker #1: But, and then we've got the Washington plant ramping up. And that is one of the areas where we are seeing opportunities in the container.

Speaker #1: And you know , as as we continue to talk about plastics converting to aluminum , that's just , you know , we we probably couldn't opened up new capacity for the container business in any better time .

Speaker #1: So , you know , we get pretty excited looking at next year and having a full year of of run rate production at the new Washington site , not to mention , we've made some investments at and are going to continue making investments at the Saint Louis site .

Tom Ferguson: So, you know, we get pretty excited looking at next year and having a full year of run rate production at the new Washington site, not to mention we've made some investments at our and are going to continue making investments at the St. Louis container site. So, you know, that's where we are excited, and we're chasing all of that we can find. And have a good partner on WashMo and then other opportunities with other customers there. So, you know, that's where our focus is, and then doing everything we can to convince customers to go with us instead of the competition.

So, you know, we get pretty excited looking at next year and having a full year of run rate production at the new Washington site, not to mention we've made some investments at our and are going to continue making investments at the St. Louis container site. So, you know, that's where we are excited, and we're chasing all of that we can find. And have a good partner on WashMo and then other opportunities with other customers there. So, you know, that's where our focus is, and then doing everything we can to convince customers to go with us instead of the competition.

Speaker #1: container So , you know , that's where we are excited and we're chasing all of that that we can find . And have have a good partner on , on , on wash mo and then other opportunities with other customers there .

Speaker #1: So , you know , that's focus is . where our And then doing everything we can to to convince customers to to go with us instead of the competition .

Speaker #3: Okay . Just one final one on . You know , I know you'll give fiscal year 27 guidance formally in a few weeks , but any sneak preview you can share with us as it relates to the variances that we should keep in mind as we , you know , as we our finalize estimates for next year .

Ghansham Panjabi: Okay. Just one final one on, you know, I know you'll give fiscal year 2027 guidance formally in a few weeks, but any sneak preview you can share with us as it relates to the variances that we should keep in mind as we, you know, as we finalize our estimates for next year?

Speaker #1: I think , No , you know , I think as I alluded to , metal coatings , we them look at finishing strong for the balance of this fiscal year .

Tom Ferguson: No, I think, you know, as I alluded to, metal coatings, we look at them finishing strong for the balance of this fiscal year. Even though they don't have backlog, they're stacking up some pretty good opportunities as we kick off going into next year. So we're feeling real good about that. Obviously, we've got a budget to get approved by our board, so we'll do that in about two weeks at this point, and then communicate as soon as we can put something together and get new guidance out. But yeah, feeling really good. I like where we're positioned. I like what our teams are doing. I like the leadership teams we've got in place, and I like what they're focusing on. So I'm pretty enthusiastic.

Thomas Ferguson: No, I think, you know, as I alluded to, metal coatings, we look at them finishing strong for the balance of this fiscal year. Even though they don't have backlog, they're stacking up some pretty good opportunities as we kick off going into next year. So we're feeling real good about that. Obviously, we've got a budget to get approved by our board, so we'll do that in about two weeks at this point, and then communicate as soon as we can put something together and get new guidance out. But yeah, feeling really good. I like where we're positioned. I like what our teams are doing. I like the leadership teams we've got in place, and I like what they're focusing on. So I'm pretty enthusiastic.

Speaker #1: And even though they don't have backlog, they're stacking up some pretty good opportunities as we kick into the off-going year.

Speaker #1: So next we're good about feeling real that . we've got Obviously a budget to get approved by our board , so we'll we'll do that in a in about three .

Speaker #1: Well, two weeks at this point. And then communicate as soon as we can put something together and get new guidance out. But yeah, feeling really good.

Speaker #1: like I where we're positioned . I like what our teams are doing . I like the teams . We've we've got in place and I like what they're focusing So I'm , I'm pretty on .

Speaker #1: enthusiastic .

Speaker #3: Perfect. Okay. Much thank you so.

Speaker #2: Next, the question comes from Nick Giles with B. Riley Securities. Please go ahead.

Ghansham Panjabi: Okay. Perfect. Thank you so much.

Speaker #4: Yeah . Thanks . Operator . Good morning everyone . Guys , congrats on the continued strong results . You know , it's especially nice to see both the buybacks and the debt wanted reduction , but I to go back to M&A and was just curious if you could give us some additional color around what kind of opportunities you're seeing out there today .

Operator: The next question comes from Nick Giles with B. Riley Securities. Please go ahead.

Nick Giles: Yeah. Thanks, operator. Good morning, everyone. Guys, congrats on the continued.

Ghansham Panjabi: Morning.

Nick Giles: Strong results. You know, it's especially nice to see both the buybacks and the debt reduction, but I wanted to go back to M&A and was just curious if you could give us some additional color around what kind of opportunities you're seeing out there today. You know, is it metal coatings versus precoat, single site or multi-site? Thanks a lot.

Speaker #4: Is Metal Coatings versus Precoat single site or multi-site? Thanks a lot.

Speaker #1: Yeah , a great question . I think the M&A pipeline is very It's active . bolt predominantly ons . Onesy Twosies , which is kind of , you know , I'd like to say it's in our sweet spot .

Tom Ferguson: Yeah, that's a great question. I think the M&A pipeline is very active. It's predominantly bolt-ons, onesies, twosies, which is kind of, you know, I'd like to say it's in our sweet spot. We acquired Canton, and just ramped it right up. You know, it's our typical integration playbook and bring it right up to our fleet margin levels and go grow it. So, those are the kind of things we've got in the pipeline. I don't see us getting anything closed by the end of this fiscal year. It's just too many things going on and, not that we're not focused on it and got some good, you know, the teams are active.

Thomas Ferguson: Yeah, that's a great question. I think the M&A pipeline is very active. It's predominantly bolt-ons, onesies, twosies, which is kind of, you know, I'd like to say it's in our sweet spot. We acquired Canton, and just ramped it right up. You know, it's our typical integration playbook and bring it right up to our fleet margin levels and go grow it. So, those are the kind of things we've got in the pipeline. I don't see us getting anything closed by the end of this fiscal year. It's just too many things going on and, not that we're not focused on it and got some good, you know, the teams are active.

Speaker #1: We acquired Canton and just ramped it right up. You know, it's our typical integration playbook, and we bring it right up to our fleet margin and levels.

Speaker #1: And go and grow it. So those are the kind of things we've got in the pipeline. I’m getting end of this closed by the anything fiscal year.

Speaker #1: It's just too many things going on . And not that we're not focused on it and got good , you some know , the teams are active , but I'll be really shocked if I'm sitting here on this call at this time next year without a couple of on wins board and talking about those on the onesie twosie bolt ons , which , which boy just we'd like to get get a couple of them in in the camp or in the family , so to speak .

Tom Ferguson: But I'll be really shocked if I'm sitting here on this call next year at this time without a couple of wins on the board and talking about those onesies, twosies, bolt-ons, which, boy, just, we'd like to get a couple of them in the camp, you know, or in the family, so to speak.

But I'll be really shocked if I'm sitting here on this call next year at this time without a couple of wins on the board and talking about those onesies, twosies, bolt-ons, which, boy, just, we'd like to get a couple of them in the camp, you know, or in the family, so to speak.

Speaker #4: Got it . Well , Tom , that's good to hear . Maybe gears switching , you talked about plastics to aluminum and you know , Washington was extremely well timed on that front .

Nick Giles: Got it. Well, Tom, that's good to hear. Maybe switching gears, you, you talked about plastics to aluminum and, you know, Washington was extremely well timed on that front. But, you know, aluminum prices have reached all-time highs in the US, and I know you don't directly feel the impact of that. You have a tolling model, but your customers might feel that impact. So I was curious if you've seen any changes in demand on that basis or if you feel the Precoat business has a sensitivity to aluminum prices.

Speaker #4: But aluminum prices have reached all time highs in the US . I know And you don't directly feel the impact of that . You have a tolling model , but your customers might feel that impact .

Speaker #4: So, I was curious if you've seen any changes in demand on that basis, or if you feel the Precoat business has a sensitivity to aluminum prices?

Speaker #1: Yeah . Thanks . Nick . This is Dave . I'll take that one . We don't think that there's going to be much sensitivity to the aluminum , just because when you look at the container market in particular , been there has this this secular shift to aluminum driven largely by people's more reluctance to drink things out of , out of plastics , in particular .

Tom Ferguson: Yeah. Thanks, Nick. This is Dave. I'll take that one. We don't think that there's going to be much sensitivity to the aluminum, just because when you look at the container market in particular, there has been this secular shift to aluminum driven largely by people's more reluctance to drink things out of plastics in particular and the concern around microplastics. When you look at the quarter in particular, I think it's underpinned by the results of the segment that our consumer segment in particular was up 11%, when you take a look at the disaggregated sales. So, we feel really good about what we're seeing. WashMo's ramping nicely, as Tom mentioned. We've got a great partner there and a lot of long-term prospects that continue to come our way.

David Nark: Yeah. Thanks, Nick. This is Dave. I'll take that one. We don't think that there's going to be much sensitivity to the aluminum, just because when you look at the container market in particular, there has been this secular shift to aluminum driven largely by people's more reluctance to drink things out of plastics in particular and the concern around microplastics. When you look at the quarter in particular, I think it's underpinned by the results of the segment that our consumer segment in particular was up 11%, when you take a look at the disaggregated sales. So, we feel really good about what we're seeing. WashMo's ramping nicely, as Tom mentioned. We've got a great partner there and a lot of long-term prospects that continue to come our way.

Speaker #1: And the concern around , microplastics . around When you look at in the quarter and particular , I think it's underpinned by the results of the segment that our consumer segment in particular was up 11% .

Speaker #1: When you at the take a look disaggregated sales . So we feel really good about what we're seeing ramping nicely . Tom As mentioned , we've got a great partner there and and long term a lot of prospects that continue to come our way .

Speaker #4: Got it . Thanks for that , Dave . Guys I'll turn it over . But keep up the good work .

Speaker #5: Right. Thank you, all.

Nick Giles: Got it. Thanks for that, Dave. Guys, I'll turn it over, but keep up the good work.

Speaker #2: The next question comes from Eric Boyce with Evercore. Please go ahead.

[Company Representative] (AZZ Inc.): All right. Thank you.

David Nark: All right. Thank you.

Speaker #6: good morning . Maybe first how how impactful to Precoat segment margins . Might the Washington , Missouri ramp to the fiscal 75% exit rate in for Qbi and when might we hear about remaining capacity allocations allocation there ?

Operator: The next question comes from Eric Boyce with Evercore. Please go ahead.

Nick Giles: Thank you and good morning. Maybe first, how impactful to Precoat segment margins might the Washington, Missouri ramp to the 75% exit rate in fiscal Q4? And when might we hear about remaining capacity allocation there?

Eric Boyce: Thank you and good morning. Maybe first, how impactful to Precoat segment margins might the Washington, Missouri ramp to the 75% exit rate in fiscal Q4? And when might we hear about remaining capacity allocation there?

Speaker #7: Yeah . Hi , Eric . Jason here . I It's can pick that one up . Certainly . You know , as we've previously communicated , the the margins that we expect from the Washington facility just based on the math of the equation of that that we're selling .

Jason Crawford: Yeah. Hi, Eric. It's Jason here. I can pick that one up. Certainly, you know, as we've previously communicated, the margins that we expect from the Washington facility, just based on the math of the equation of that product that we're selling, are going to be complementary. So that is going to add a lot of that tailwind to the margins that we see at Precoat. In terms of the additional capacity, you know, we're solely focused on our partner at the moment, and ramping up capacity for that partner. It's coming through the cycle, and we're very pleased with where we're at, but we still got a lot of work to do and certainly a lot of work to achieve here in Q4.

Speaker #7: Products are going to be complementary, so it is going to add a little bit of tailwind to the margins that we see at Precoat, in terms of the additional capacity.

Speaker #7: We're solely focused on our partner at the moment and ramping up capacity for that partner. It's coming through the cycle, and we're very pleased with where we're at, but we've still got a lot of work to do and certainly a lot of work to achieve here in Q4.

Speaker #7: So, it's really going to be into the early part to the mid part of next year before we really start to focus on bringing additional customers to that facility.

Jason Crawford: So it's really going to be into the early part to the mid part of next year before we really start to focus on bringing additional customers to that facility.

So it's really going to be into the early part to the mid part of next year before we really start to focus on bringing additional customers to that facility.

Speaker #6: Okay . Appreciate that . And then maybe second and Dave , I think you alluded to it in the prepared remarks , but can you help us with how we should think about kind of quantifying the benefit of the favorable weather comp in fiscal four ?

Ghansham Panjabi: Okay. Appreciate that. And then, maybe second, and Dave, I think you alluded to it in the prepared remarks, but can you help us with how we should think about kind of quantifying the benefit of the favorable weather comp in fiscal Q4?

Speaker #6: Q .

Speaker #1: Yeah , you know , as we mentioned , on a high level , when you look at last year , it was unseasonably , you know , cold and wet .

Tom Ferguson: Yeah. You know, as we mentioned on a high level, when you look at last year, it was unseasonably, you know, cold and wet. We had mentioned last year, I think, that we lost around 200 days of production collectively in the quarter. So, you know, I don't have the specifics in front of me right now, but we do believe that we're seeing better weather so far in the fourth quarter. You know, today in Texas, it's going to be 80 degrees. So, a far cry better than it was last year at this time. But, you know, we can follow up maybe after the call, and I can see if I can get you more detail.

Thomas Ferguson: Yeah. You know, as we mentioned on a high level, when you look at last year, it was unseasonably, you know, cold and wet. We had mentioned last year, I think, that we lost around 200 days of production collectively in the quarter. So, you know, I don't have the specifics in front of me right now, but we do believe that we're seeing better weather so far in the fourth quarter. You know, today in Texas, it's going to be 80 degrees. So, a far cry better than it was last year at this time. But, you know, we can follow up maybe after the call, and I can see if I can get you more detail.

Speaker #1: We had mentioned last year , I think , that we lost around 200 days of production collectively in the quarter . So , you know , I don't have the specifics in front of me right now , but we do believe that we're we're seeing better weather so far in the fourth quarter .

Speaker #1: You know , today in Texas , it's going to be 80 degrees . So a far cry better than than it was last year at this time .

Speaker #1: But you know , we can we can follow up maybe after the call . And I can see if I can get you more detail .

Speaker #6: So much great. Thanks.

Speaker #2: The next question comes from Adam Thalhimer with Thompson Davis. Please go ahead.

Ghansham Panjabi: Great. Thanks so much.

Speaker #8: Hey, good morning, guys. Congrats on the record sales.

Operator: The next question comes from Adam Thalhimer with Thomson Davis. Please go ahead.

Speaker #5: Thank you

Speaker #5: .

Speaker #8: Can you update us on quarter-to-quarter pricing in the metal segment? How iron price might also be impacting margins in that segment?

Adam Thalhimer: Hey, good morning, guys. Congrats on the record sales quarter.

Tom Ferguson: Thank you.

Thomas Ferguson: Thank you.

Adam Thalhimer: Can you update us on pricing in the metal coatings segment? I'm curious also how price might be impacting margins in that segment.

Speaker #5: Yeah . You know we talk a lot about we try talk not to directly about since we do have pricing some competitors on these calls , but when we're chasing large projects and when we talk transmission about and , distribution and data centers , they tend to be bigger projects .

Tom Ferguson: Yeah. You know, we talk a lot about, we try not to talk directly about pricing since we do have some competitors on these calls. But when we're chasing large projects and when we talk about transmission and distribution and solar and data centers, they tend to be bigger projects, and so it just attracts more competition. So it'll, that's when we're talking about, you know, the mix because you're going to have not significantly, but you're going to have marginally lower margins on those big projects. And so they form a bigger piece of our business. And we had opened up to that because we had decided that we were pushing the top end of our margins and the, so we've kind of opened up the opportunities.

Thomas Ferguson: Yeah. You know, we talk a lot about, we try not to talk directly about pricing since we do have some competitors on these calls. But when we're chasing large projects and when we talk about transmission and distribution and solar and data centers, they tend to be bigger projects, and so it just attracts more competition. So it'll, that's when we're talking about, you know, the mix because you're going to have not significantly, but you're going to have marginally lower margins on those big projects. And so they form a bigger piece of our business. And we had opened up to that because we had decided that we were pushing the top end of our margins and the, so we've kind of opened up the opportunities.

Speaker #5: And so it just attracts more competition. So that's when we're talking about, you know, the, because your mix is going to have that significantly, but you're going to have marginally lower those margins on big projects.

Speaker #5: And formed a so they piece of our business . And we we had opened up to that because we had decided that we were top end pushing the margins and of our so we've kind of opened up the opportunities .

Speaker #5: Let's, let's chase some. Hey, hey, call it chasing the volume. But let's also be more open to taking some of that.

Tom Ferguson: Let's chase some volume, but hate to call it chasing the volume, but let's be more open to taking some of those opportunities. I think it's been good for us because we've got capacity, and that's going to help us the balance of this quarter, definitely helped us in the third quarter. But you know, we're not getting out of control. We got a tightly controlled process on how we price projects. A couple of other things that hasn't been talked about, but we do have zinc continuing to go up in our kettles. We tend to push prices as those costs go up. And we price it 41 plants on every given day. So I think the teams have demonstrated great discipline, and yet going after opportunities with customers to build sustainable momentum.

Let's chase some volume, but hate to call it chasing the volume, but let's be more open to taking some of those opportunities. I think it's been good for us because we've got capacity, and that's going to help us the balance of this quarter, definitely helped us in the third quarter. But you know, we're not getting out of control. We got a tightly controlled process on how we price projects. A couple of other things that hasn't been talked about, but we do have zinc continuing to go up in our kettles. We tend to push prices as those costs go up. And we price it 41 plants on every given day. So I think the teams have demonstrated great discipline, and yet going after opportunities with customers to build sustainable momentum.

Speaker #5: Those opportunities . And I think it's been good for us because we've got we've got capacity that's going to help us . The balance of this quarter .

Speaker #5: definitely helped us It in the third quarter . But you know , we're not we're not getting out of control . It's we got a controlled tightly process on how we price projects .

Speaker #5: A couple of things. Other that hasn't been talked about, but we do have zinc continuing to go up kettles. We, in our tend to, push prices as those costs go up, and we price it at 41 plants on every given day.

Speaker #5: So I think the teams have great, demonstrated discipline, and yet are going after opportunities with customers to build sustainable momentum. And so we're pretty excited at this point about what that team's doing.

Speaker #8: And either either Tom or David could address am this . But I curious . You know , you guys aren't the talking only ones about the data centers getting bigger in 2026 versus 2025 .

Tom Ferguson: And so we're pretty excited at this point about what that team's doing.

And so we're pretty excited at this point about what that team's doing.

Ghansham Panjabi: Either Tom or David could address this, but I am curious, you know, you guys aren't the only ones talking about the data centers getting bigger in 2026 versus 2025. Just curious if you could flesh that out a little bit for us, and why you're focused more on it today.

Speaker #8: Just curious if you could flesh that out a little bit for us, and why you're focused more on it today.

Speaker #1: Yeah , I think as you look at the data centers and in my remarks , I was talking you know , we're really excited about the number of opportunities within a data center that , you know , we touch .

Tom Ferguson: Yeah. I think as you look at the data centers and in my remarks, I was talking about, you know, we're really excited about the number of opportunities within a data center that, you know, we touch. So it goes just beyond, you know, structural steel that's used for, you know, building foundations and the structure envelope of the building and then the related power coming into it. We do believe that Precoat will see some opportunities as those projects move further along. We've got customers on the Precoat side that make insulated wall panels, for instance. And then there's a lot of code-specific work that's driving the need for increased metal, and coated metal, whether it's galvanized or pre-painted. So that's why we're bullish on the segment. It's a big segment.

Thomas Ferguson: Yeah. I think as you look at the data centers and in my remarks, I was talking about, you know, we're really excited about the number of opportunities within a data center that, you know, we touch. So it goes just beyond, you know, structural steel that's used for, you know, building foundations and the structure envelope of the building and then the related power coming into it. We do believe that Precoat will see some opportunities as those projects move further along. We've got customers on the Precoat side that make insulated wall panels, for instance. And then there's a lot of code-specific work that's driving the need for increased metal, and coated metal, whether it's galvanized or pre-painted. So that's why we're bullish on the segment. It's a big segment.

Speaker #1: So it goes just beyond structural steel that's used for, you know, building foundations and the structural envelope of the building.

Speaker #1: And the related power coming into it . We do believe that will see Precoat some those projects move further along opportunities as . customers We've got on the Precoat side that that make insulated wall panels , for .

Speaker #1: And then, a lot of code work that's specific is driving the need for increased metal and coated metal, whether it's galvanized or prepainted.

Speaker #1: So so that's why we're bullish on the segment . It's a big segment . It's a growing segment . And our share within it is expanding as well .

Speaker #8: Good . And last one for me you brought up David , the metal roofing opportunity . Do you have any idea today what the share of metal roofing is for new construction and repair and remodel versus asphalt ?

Tom Ferguson: It's a growing segment, and our share within it is expanding as well.

It's a growing segment, and our share within it is expanding as well.

Ghansham Panjabi: Good. And a last one for me. David, you brought up the metal roofing opportunity. Do you have any idea today what the share of metal roofing is for new construction, repair, and remodel versus asphalt?

Speaker #1: Yeah , we do have some . We do have some data on You know , when you that . look at sort of the breakout in residential between new construction and replacement , it's just of 5% of the new shy construction market is now metal embracing roofing .

Tom Ferguson: Yeah. We do have some data on that. You know, when you look at sort of the breakout in residential between new construction and replacement, it's just shy of 5% of the new construction market is now embracing metal roofing. It's gone up, you know, about a point, a full point since five years ago. And so we think that trend's going to continue. And then on the replacement side, it's a larger impact there. It's about 14% of the replacement market today and growing at a faster rate driven by a few things. One of them is building codes. It is more resistant to storm damage over time than asphalt shingle.

David Nark: Yeah. We do have some data on that. You know, when you look at sort of the breakout in residential between new construction and replacement, it's just shy of 5% of the new construction market is now embracing metal roofing. It's gone up, you know, about a point, a full point since five years ago. And so we think that trend's going to continue. And then on the replacement side, it's a larger impact there. It's about 14% of the replacement market today and growing at a faster rate driven by a few things. One of them is building codes. It is more resistant to storm damage over time than asphalt shingle.

Speaker #1: It's gone up , you know , about a point , a full point since five years ago . And so we think that trend is going to continue .

Speaker #1: And then on the replacement side , it's a larger impact there . It's about 14% of the market today . And and growing at a faster rate driven by a few things .

Speaker #1: One of them is building codes. It is more resistant to storm damage over time than asphalt shingle. And also HOAs, which have historically been a little too reluctant to embrace different types of roofing materials other than asphalt, are now loosening up their standards and embracing that as well.

Tom Ferguson: and also HOAs, which have historically been a little reluctant to embrace different types of roofing material other than asphalt, are now loosening up their standards and embracing that as well. So we're very excited about it.

and also HOAs, which have historically been a little reluctant to embrace different types of roofing material other than asphalt, are now loosening up their standards and embracing that as well. So we're very excited about it.

Speaker #1: So, we're excited about it.

Speaker #8: Great. I'll turn it over. Thanks, guys.

Speaker #5: Thanks .

Speaker #2: Next, the question comes from Daniel Rizzo with Jefferies. Please go ahead.

Ghansham Panjabi: Great. I'll turn it over. Thanks, guys.

Tom Ferguson: Thanks.

Thomas Ferguson: Thanks.

Speaker #9: Hi . Thanks for taking my question . Just to follow up on that last that last comment . Is there a particular region in the country where where metal reroofing is more prevalent ?

Operator: The next question comes from Daniel Rizzo with Jefferies. Please go ahead.

Philip Cooper: Hi. Thanks for taking my question. Just to follow up on that last comment, is there a particular region in the country where metal reroofing is more prevalent? You said you mentioned HOAs. I don't know. When I think HOAs, I think of where my parents live, which is a kind of retirement places in Florida and Arizona. Is there any regional mix that's relevant?

Daniel Rizzo: Hi. Thanks for taking my question. Just to follow up on that last comment, is there a particular region in the country where metal reroofing is more prevalent? You said you mentioned HOAs. I don't know. When I think HOAs, I think of where my parents live, which is a kind of retirement places in Florida and Arizona. Is there any regional mix that's relevant?

Speaker #9: You mentioned HOAs. I don't think HOA is—I mean, when I think of HOAs, I think of where my parents live, which is retirement places in Florida and in Arizona.

Speaker #9: Is there any regional mix that's relevant?

Speaker #1: Absolutely . Daniel . Yeah , we're seeing a stronger concentration of that through the South in the areas that you Florida in mentioned .

Speaker #1: So particular , as well as here in Texas and all the way over to to Southern California and Arizona , are all markets that generally have a higher concentration of metal roof than , than in the northern climates ?

Tom Ferguson: Absolutely, Daniel. Yeah. We're seeing a stronger concentration of that through the South in the areas that you mentioned. So Florida in particular, as well as here in Texas, and all the way over to Southern California and Arizona are all markets that generally have a higher concentration of metal roof than in the northern climates.

Thomas Ferguson: Absolutely, Daniel. Yeah. We're seeing a stronger concentration of that through the South in the areas that you mentioned. So Florida in particular, as well as here in Texas, and all the way over to Southern California and Arizona are all markets that generally have a higher concentration of metal roof than in the northern climates.

Speaker #9: Okay . I may have asked this before , but sorry . Go ahead . I'm sorry . And Did you say something ?

Speaker #5: Just going to—I was going to say, yeah, they do. They do. Where? Well, when you've got a more corrosive environment or you've got a lot of sun.

Philip Cooper: Okay. And I may have asked this before, but.

Phillip Kupper: Okay. And I may have asked this before, but.

Tom Ferguson: Yeah.

Thomas Ferguson: Yeah.

Philip Cooper: Sorry. Go ahead. I'm sorry. You were going to say something?

Phillip Kupper: Sorry. Go ahead. I'm sorry. You were going to say something?

Tom Ferguson: No, I was just going to say, yeah, they do, they do well where you've got more of a corrosive environment or you've got a lot of sun. So they tend to hold up better.

Thomas Ferguson: No, I was just going to say, yeah, they do, they do well where you've got more of a corrosive environment or you've got a lot of sun. So they tend to hold up better.

Speaker #5: So they tend to hold up better.

Speaker #9: Okay , okay . No , that makes sense . And then , you know , the for traditional kind of non-risky construction and maybe I've asked but this before , what's the lag between when you start to see some easing in credit towards a demand towards a , you starting know , to rebuild and kind of translates to demand for , for you guys , is it immediate or like a six month lag or how should we is it think about it ?

Philip Cooper: Okay. Okay. No, that makes sense. And then, you know, for the just kind of traditional non-resi construction, and maybe I've asked this before, but how, what's the lag between when you start to see some easing in credit towards a demand towards a resi, you know, resi starting to rebuild and then it kind of translates to demand for you guys? Is it immediate or is there like a six-month lag or how should we think about it?

Phillip Kupper: Okay. Okay. No, that makes sense. And then, you know, for the just kind of traditional non-resi construction, and maybe I've asked this before, but how, what's the lag between when you start to see some easing in credit towards a demand towards a resi, you know, resi starting to rebuild and then it kind of translates to demand for you guys? Is it immediate or is there like a six-month lag or how should we think about it?

Speaker #1: Yeah . You know , when you look at again , it and kind of taking a look at just some of our sales data , we have seen in my prepared remarks , I talked about subdued on construction the on the Non-risky side and then the , the residential being down a little more significantly .

Tom Ferguson: Yeah. You know, when you look at it, and again, kind of taking a look at just some of our sales data, we have seen, in my prepared remarks I talked about subdued construction on the non-resi side, and then the residential being down a little more significantly. So, I think that as you move forward, you know, through the end of this year and into next year, the fact that there's been some rate movement already should be a positive for the market, and we should start to see the benefit of that sometime here in, you know, as we enter into calendar 2026 and our FY 2027. And I'd add on the residential side, it's more tracking to, you know, mortgage rates.

Thomas Ferguson: Yeah. You know, when you look at it, and again, kind of taking a look at just some of our sales data, we have seen, in my prepared remarks I talked about subdued construction on the non-resi side, and then the residential being down a little more significantly. So, I think that as you move forward, you know, through the end of this year and into next year, the fact that there's been some rate movement already should be a positive for the market, and we should start to see the benefit of that sometime here in, you know, as we enter into calendar 2026 and our FY 2027. And I'd add on the residential side, it's more tracking to, you know, mortgage rates.

Speaker #1: So I think that as you move forward , you through the of this year the end and into next year , the fact that there's been some , some rate movement already should be a positive for the market and we should start to see the benefit of that sometime here in , you know , as we enter into calendar 2026 and our FY 2027 .

Speaker #5: And I'd add on the residential side , it's more tracking to mortgage rates . But , you know , it's going to a lot of these capital projects .

Speaker #5: It's a 6 to 9 month lag time in general . So and but it's looking at the forward curve . So . We're we're hearing more optimism out there I guess I'll leave it at that .

Tom Ferguson: You know, it's going to, on a lot of these capital projects, it's a six- to nine-month lag time in general. But it's looking at the forward curve. So, we're hearing more optimism out there, I guess. I'd leave it at that.

You know, it's going to, on a lot of these capital projects, it's a six- to nine-month lag time in general. But it's looking at the forward curve. So, we're hearing more optimism out there, I guess. I'd leave it at that.

Speaker #9: Okay. Thank you for the color.

Speaker #10: Sure .

Speaker #2: The question next comes from Mark Reichman with Capital Noble Markets. Please go ahead.

Philip Cooper: Okay. Thank you for the color.

Phillip Kupper: Okay. Thank you for the color.

Tom Ferguson: Sure.

Thomas Ferguson: Sure.

Speaker #11: Thank you. Just focusing on the metal coatings business for a minute. So, the second quarter, the sales growth was 10.8% relative to the prior year quarter.

Operator: The next question comes from Mark Reichman with Noble Capital Markets. Please go ahead.

Philip Cooper: Thank you. Just focusing on the metal coatings business for a minute. So Q2, you know, the sales growth was 10.8% relative to the prior year quarter and 15.7% Q3 year over year. We did see the gross margin go down a little bit, you know, 30% Q2 versus what was it? 30.9 and 29.8% versus 30.9. You mentioned chasing these bigger projects, but could you maybe get a little more specific? You know, are there specific large contracts that kind of drove the big sales increase? And might you expect in 2027 maybe a little more moderation in the sales growth, but maybe a tick up in the margin? Or do you think these big projects are just going to continue?

Mark Reichman: Thank you. Just focusing on the metal coatings business for a minute. So Q2, you know, the sales growth was 10.8% relative to the prior year quarter and 15.7% Q3 year over year. We did see the gross margin go down a little bit, you know, 30% Q2 versus what was it? 30.9 and 29.8% versus 30.9. You mentioned chasing these bigger projects, but could you maybe get a little more specific? You know, are there specific large contracts that kind of drove the big sales increase? And might you expect in 2027 maybe a little more moderation in the sales growth, but maybe a tick up in the margin? Or do you think these big projects are just going to continue?

Speaker #11: And 15.7% third quarter year over year . And and did see the gross margin go we down a little bit . You know , 30% the second quarter versus was it 30.9 .

Speaker #11: And 29.8% versus 30.9 . You mentioned chasing these bigger projects , but could you maybe get a little more specific . Are there specific large contracts that kind of drove the the big sales increase ?

Speaker #11: And might you expect in 2027, a little maybe more the moderation in sales growth, but maybe a tick up in the margin?

Speaker #11: Or do you think these big projects are just going to continue?

Speaker #5: I think there's a couple of things here . So if you take typical transmission distribution , big poles , towers , it's it depends on where it hits , you know , which plants the project activities at some of our plants are , are built big for poles .

Tom Ferguson: No, I think there's a couple of things here. So if you take typical transmission distribution, big poles, towers, it depends on where it hits, you know, which plants, the project activities at. Some of our plants are built for big poles when projects come in different sections of the, so this is a very temporary kind of thing. And we've invested a lot in our capabilities and capacity. So yeah, as we get into next year, I expect that, you know, we'll you'll see those margins hold, hopefully improve as we've got some operational improvement activities. We've invested in kettle capacity. We've invested in, you know, specific things that'll help us run some of these kinds of projects or the bigger projects better.

Thomas Ferguson: No, I think there's a couple of things here. So if you take typical transmission distribution, big poles, towers, it depends on where it hits, you know, which plants, the project activities at. Some of our plants are built for big poles when projects come in different sections of the, so this is a very temporary kind of thing. And we've invested a lot in our capabilities and capacity. So yeah, as we get into next year, I expect that, you know, we'll you'll see those margins hold, hopefully improve as we've got some operational improvement activities. We've invested in kettle capacity. We've invested in, you know, specific things that'll help us run some of these kinds of projects or the bigger projects better.

Speaker #5: when When , projects come in different sections of the . this is So so this is a very kind of temporary thing . And we've invested a lot in our capabilities and capacities .

Speaker #5: So yeah , as we get into next year , I expect that , you know we'll you'll see those margins hold . Hopefully improve as we've got some operational improvement activities .

Speaker #5: We've invested in cattle capacity. We've invested in, you know, specific things that will help us run some of these kinds of projects or the bigger projects better.

Speaker #5: And then we've added more trucking so that we can move things in between our customers and our plants, and pivot things to the plants that are going to be more capable of running certain projects.

Tom Ferguson: And then we've added more trucking so that we can move things in between our customers and our plants and pivot things to the plants that are going to be more capable of running certain projects. So a lot of things that we've been doing this year too, which is one of the reasons we did open it up, and we want to continue with that momentum going into next year. So yeah, I would not expect to see double-digit growth quarter over quarter going in, you know, as we get into next year. I expect growth. And I also expect us to be able to handle it with the margin profile at the, you know, kind of where we're at plus.

And then we've added more trucking so that we can move things in between our customers and our plants and pivot things to the plants that are going to be more capable of running certain projects. So a lot of things that we've been doing this year too, which is one of the reasons we did open it up, and we want to continue with that momentum going into next year. So yeah, I would not expect to see double-digit growth quarter over quarter going in, you know, as we get into next year. I expect growth. And I also expect us to be able to handle it with the margin profile at the, you know, kind of where we're at plus.

Speaker #5: So a lot , a lot of things that we've been doing this year to which is one of the reasons we did open it up and we want to want to continue with that momentum going into next year .

Speaker #5: So so would yeah , I not expect to see double digit growth quarter over quarter going , you know , as we get into next year , I expect growth and also expect us to be able to handle it with with the margin profile that the , you know , kind of where we're at .

Speaker #5: Plus .

Speaker #11: Then great job you've done a reducing debt . And you repurchasing shares just on the dividend policy . Have you kind of now set a precedent with the with the increase in the in the first quarter dividend ?

Philip Cooper: So you've done a great job reducing debt and, you know, repurchasing shares. Just on the dividend policy, have you kind of now set a precedent with the increase in the first quarter dividend? I mean, is that kind of what investors can kind of expect, is maybe one increase per year?

Phillip Kupper: So you've done a great job reducing debt and, you know, repurchasing shares. Just on the dividend policy, have you kind of now set a precedent with the increase in the first quarter dividend? I mean, is that kind of what investors can kind of expect, is maybe one increase per year?

Speaker #11: mean , is I that kind of what investors kind of expect is , is one one increase per maybe year ?

Speaker #7: It certainly, obviously, with the realignment of our debt and the Vale transaction in the summer, it gives us the luxury to—to, whether it be an annual readdress, that.

Tom Ferguson: It certainly, obviously with the realignment of our debt and the Avail transaction in the summer, it gives us the luxury to readdress that and whether it be on an annual basis or such like. It's certainly something that's on our radar. It's certainly something that we continue to consider and continue to take a look at. So given that profile, then it's certainly something that we will look at, come up for this next cycle.

Thomas Ferguson: It certainly, obviously with the realignment of our debt and the Avail transaction in the summer, it gives us the luxury to readdress that and whether it be on an annual basis or such like. It's certainly something that's on our radar. It's certainly something that we continue to consider and continue to take a look at. So given that profile, then it's certainly something that we will look at, come up for this next cycle.

Speaker #7: On a basis, or such like, it's certainly something that's on our radar. It's certainly something that we continue to consider and continue to take a look at.

Speaker #7: So that given profile, certainly, then it's something that we will look at coming up for this, this, this cycle next.

Speaker #5: Yeah . And we are we are committed to being more regimented about looking at it consistently each year . And and as we you know , this is the time where we are putting the budgets together , the plans together , and talking about these things with our with board .

Philip Cooper: Yeah. And we are, we are committed to being more regimented about looking at it consistently each year. And, and as we, you know, this is the time where we are putting the budgets together, the plans together, and, and talking about these things with our, with our board. So, you know, the time is good, as Jason said. But we're, we're committed to evaluating this annually and not, not having it go several years like it did this last time before we have an increase. Yeah. Well, you're in a good spot. You've got the debt paid down, and you're generating good cash flow. So thank you very much for the, for the, color.

Phillip Kupper: Yeah. And we are, we are committed to being more regimented about looking at it consistently each year. And, and as we, you know, this is the time where we are putting the budgets together, the plans together, and, and talking about these things with our, with our board. So, you know, the time is good, as Jason said. But we're, we're committed to evaluating this annually and not, not having it go several years like it did this last time before we have an increase. Yeah. Well, you're in a good spot. You've got the debt paid down, and you're generating good cash flow. So thank you very much for the, for the, color.

Speaker #5: our So , you know , the timing is good . As Jason said . But we're committed to evaluating this annually and not not having to go several years like it did this last time before .

Speaker #5: We have an increase .

Speaker #11: Yeah , well , you're in a good spot . You've got the debt paid you're down generating and good cash flow . So thank you very much for the for the color .

Speaker #5: Sure thing .

Speaker #7: Thank you .

Speaker #2: The question next comes from Sweeney Jerry with Ross Capital. Please go ahead.

Tom Ferguson: Sure thing. Thank you.

Thomas Ferguson: Sure thing. Thank you.

Speaker #12: Good morning. Tom, Jason, David, thanks for taking my call.

Operator: The next question comes from Jerry Sweeney with Roth Capital. Please go ahead.

Gerard Sweeney: The next question comes from Jerry Sweeney with Roth Capital. Please go ahead.

Speaker #10: Sure .

Speaker #12: Most of my questions have been answered, but I just had one quick question on Precoat. You implied that you think the segment has bottomed, but we also talked about some prepainted imports that are in a surplus.

Jerry Sweeney: Good morning, Tom, Jason, David. Thanks for taking my call.

Gerard Sweeney: Good morning, Tom, Jason, David. Thanks for taking my call.

Tom Ferguson: Sure.

Thomas Ferguson: Sure.

Jerry Sweeney: Most of my questions have been answered, but I just had one quick question on Precoat. You implied that you think the segment has bottomed, but we also talked about some pre-painted imports there being a surplus. How are you able to bracket out how much that surplus was a headwind for the segment and what we should be thinking about that on a go-forward basis?

Gerard Sweeney: Most of my questions have been answered, but I just had one quick question on Precoat. You implied that you think the segment has bottomed, but we also talked about some pre-painted imports there being a surplus. How are you able to bracket out how much that surplus was a headwind for the segment and what we should be thinking about that on a go-forward basis?

Speaker #12: Have you been able to bracket out how much that surplus was a headwind for the segment, and what we should be thinking about that on a go-forward basis?

Speaker #7: Yeah , certainly . You know , the thought process round about the prepainted metal imports is really correlating to the the data that we can see internally .

Tom Ferguson: Yeah. Certainly, you know, the thought process around about the prepainted metal imports is really correlating the data that we can see internally. So we can see internally the bare imports coming in, and get a feeling for that and then translate it back into what prepainted import material is out there in the pipeline. So we've seen that filter through our system and filter through our customer systems to the point where less prepainted metal imports historically up to this point in time have not necessarily had any impact on our business. And our anticipation going forward is we start to see some of that benefit filter through. If you think about that prepainted metal import market, it's around about 10% of the US market is fulfilled through that supply chain.

Yeah. Certainly, you know, the thought process around about the prepainted metal imports is really correlating the data that we can see internally. So we can see internally the bare imports coming in, and get a feeling for that and then translate it back into what prepainted import material is out there in the pipeline. So we've seen that filter through our system and filter through our customer systems to the point where less prepainted metal imports historically up to this point in time have not necessarily had any impact on our business. And our anticipation going forward is we start to see some of that benefit filter through. If you think about that prepainted metal import market, it's around about 10% of the US market is fulfilled through that supply chain.

Speaker #7: So we can see internally the imports coming in and get a feeling for that. And then translate it back into what prepainted import material is out there in the pipeline.

Speaker #7: So we've seen that filter through our filter through our system and systems to customer the point where less prepainted metal imports historically , up to this point in time , have not necessarily had any impact on our and our anticipation going forward is we start to see some of that benefit filter through .

Speaker #7: If you think about that, the prepainted metal import market, it's around about 10% of the U.S. market that's fulfilled through that supply chain.

Speaker #7: It's down around about 35% this year, but it's gaining momentum in terms of how much it's down. Obviously, it's down more as you get to the third quarter versus the first quarter.

Tom Ferguson: It's down around about 35% this year, but it's gaining momentum in terms of how much it's down. Obviously, it's down more as you get to the third quarter versus the first quarter. So it creates that market opportunity. And really, as you look at that pre-painted metal import market and who can serve that market, then there's only a couple of players that can really serve that market. And obviously, AZZ Precoat is one of the names at the top of that list. So it creates a nice little opportunity for us as we start to look at our opportunities for next year.

It's down around about 35% this year, but it's gaining momentum in terms of how much it's down. Obviously, it's down more as you get to the third quarter versus the first quarter. So it creates that market opportunity. And really, as you look at that pre-painted metal import market and who can serve that market, then there's only a couple of players that can really serve that market. And obviously, AZZ Precoat is one of the names at the top of that list. So it creates a nice little opportunity for us as we start to look at our opportunities for next year.

Speaker #7: So it creates that market opportunity. And really, as you look at that prepainted metal import market and who can serve that market, then there's only a couple of players that can really serve that market.

Speaker #7: And obviously, AZZ Inc is one of the names at the top of that list. So, it creates a nice little opportunity for us as we start to look at our opportunities for next year.

Speaker #12: appreciate I it .

Speaker #12: That's it for me . Happy . Got it . New Year and congrats on a nice quarter .

Speaker #5: All right. Happy New Year.

Jerry Sweeney: Got it. I appreciate it. That's it for me. Happy New Year, and congrats on a nice quarter.

Gerard Sweeney: Got it. I appreciate it. That's it for me. Happy New Year, and congrats on a nice quarter.

Speaker #1: Thanks .

Speaker #10: Jerry .

Speaker #2: This concludes our question and answer session. I would like to turn the conference back over to Thomas Ferguson, CEO, for any closing remarks.

Tom Ferguson: All right. Happy New Year. Thanks, Jerry.

Thomas Ferguson: All right. Happy New Year. Thanks, Jerry.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Tom Ferguson, CEO, for any closing remarks.

Speaker #5: Thank you . Operator . And thank you for joining us this morning . As you can tell , we've we're pleased with our results for the Q3 good about the full year .

Tom Ferguson: Thank you, operator. Thank you for joining us this morning. As you can tell, we're pleased with our results for the Q3. Feeling good about the full year. And then, it's early, but getting excited about fiscal 2027, looking forward to announcing guidance for fiscal 2027 and then announcing our results in a few months. So, happy New Year. Thank you for joining us.

Thomas Ferguson: Thank you, operator. Thank you for joining us this morning. As you can tell, we're pleased with our results for the Q3. Feeling good about the full year. And then, it's early, but getting excited about fiscal 2027, looking forward to announcing guidance for fiscal 2027 and then announcing our results in a few months. So, happy New Year. Thank you for joining us.

Speaker #5: And then it's early, but getting excited about fiscal 2027. Looking forward to guidance announcing for fiscal 2027, and then announcing our results in a few months.

Speaker #5: So, happy New Year. Thank you for joining us.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Q3 2026 AZZ Inc Earnings Call

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