# AZZ INC (AZZ) FY 2026 MD&A

Verbatim Item 7 Management's Discussion and Analysis from AZZ INC's 10-K for fiscal year 2026.

SEC filing source: https://www.sec.gov/Archives/edgar/data/8947/000000894726000068/azz-20260228.htm
Accession: 0000008947-26-000068
Filing date: 2026-04-22
Report date: 2026-02-28
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/AZZ/
All MD&A years: /company/AZZ/mda/
Previous year: /company/AZZ/mda/fy2025/ (FY 2025)

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion together with "Item 8. Financial Statements and Supplementary Data." This discussion contains forward-looking statements regarding our business and operations; see "Forward-Looking Statements" at the beginning of this Annual Report on Form 10-K. Our actual results may differ materially from those we currently anticipate as a result of the factors we describe under "Item 1A. Risk Factors" and elsewhere in this Annual Report on Form 10-K.

A discussion regarding our financial condition and results of operations as well as our liquidity and capital resources for fiscal year 2025 compared to fiscal year 2024 can be found under "Item 7. Management's Discussion and Analysis" in our Annual Report on Form 10-K for the fiscal year ended February 28, 2025, filed with the SEC on April 21, 2025, which such discussion is hereby incorporated by reference.

Overview

We are a provider of hot-dip galvanizing and coil coating solutions to a broad range of end-markets in North America. We operate three distinct business segments, the AZZ Metal Coatings segment, the AZZ Precoat Metals segment, and the AZZ Infrastructure Solutions segment, which consists of the Company's 40% investment in the AVAIL JV joint venture. Our discussion and analysis of financial condition and results of operations is presented for each of our segments, along with corporate costs and other costs not specifically identifiable to a segment. References herein to fiscal years are to the twelve-month periods that end in February of the relevant calendar year. For example, the twelve-month period ended February 28, 2026 is referred to as "fiscal 2026," "fiscal year 2026", "current year" or "current period", and the twelve-month period ended February 28, 2025 is referred to as "fiscal 2025," "fiscal year 2025," "prior year" or "prior year period."

Business Operations Update

Our results for the year ended February 28, 2026 were favorably impacted primarily by the recognition of equity in earnings for the AVAIL JV, which included the gain from AVAIL's sale of the Electrical Products Group and the Welding Services Business, and by the growth in demand for our manufactured solutions in the electrical, construction and industrial end markets.

The equity in earnings from the AVAIL JV was the primary contributor to net income available to common shareholders of $317.3 million for the year ended February 28, 2026. Our operating results for fiscal 2026, including operating results by segment, are described in the summary on the following page, and detailed descriptions can be found below under “Results of Operations.”

Our operations generated $525.4 million of cash in fiscal 2026. The components of our liquidity and descriptions of our cash flows, capital investments, and other utilities, construction and matters impacting our liquidity and capital resources can be found below under "Liquidity and Capital Resources."

Outlook

While it is difficult to predict future North American economic activity and its impact on the demand for our galvanizing and coil coating solutions, as well the impact that political or regulatory developments may have on us, we have noted several factors below that have impacted or may impact our results of operations during the first quarter of fiscal 2027.

•Sales prices in our AZZ Metal Coatings segment are expected to remain consistent with current levels. Fluctuations in product mix, along with competitive market pressures, may impact selling price.

•Sales prices in our AZZ Precoat Metals segment are expected to increase on average from past levels, resulting from passing through higher pricing on specified materials along with increased overall selling prices, although fluctuations in mix may impact the average selling price.

•Demand in our AZZ Metal Coatings and AZZ Precoat Metals segments is expected to follow our typical seasonal patterns.

•Volumes for our AZZ Metal Coatings segment remain at normal seasonal levels, which should support the continued demand for our metal coatings solutions.

•Customer inventories for our AZZ Precoat Metals segment remain at normal seasonal levels, which should support the continued demand for our coil coating solutions.

22

Table of Contents

Results of Operations

Income before income tax for our operating segments and corporate operations for fiscal 2026 and 2025 was as follows (in thousands):

[[GREPCENT_TABLE]]
[["","Year Ended February 28, 2026"],["","Metal Coatings(1)","","Precoat Metals","","Infrastructure Solutions(2)","","Corporate(3)(4)","","Total"],["Sales","$","758,709","","","$","891,371","","","$","\u2014","","","$","\u2014","","","$","1,650,080"],["Cost of sales","531,089","","","724,036","","","\u2014","","","\u2014","","","1,255,125"],["Gross margin","227,620","","","167,335","","","\u2014","","","\u2014","","","394,955"],["Selling, general and administrative(5)","23,982","","","29,251","","","130","","","76,975","","","130,338"],["Operating income (loss)","203,638","","","138,084","","","(130)","","","(76,975)","","","264,617"],["Interest expense","\u2014","","","\u2014","","","\u2014","","","(55,650)","","","(55,650)"],["Equity in earnings of unconsolidated subsidiaries(6)","\u2014","","","\u2014","","","209,733","","","\u2014","","","209,733"],["Other income (expense)","(43)","","","18","","","\u2014","","","1,640","","","1,615"],["Income (loss) before income tax","$","203,595","","","$","138,102","","","$","209,603","","","$","(130,985)","","","$","420,315"]]
[[/GREPCENT_TABLE]]

See notes on page 23.

[[GREPCENT_TABLE]]
[["","Year Ended February 28, 2025"],["","Metal Coatings","","Precoat Metals","","Infrastructure Solutions(2)","","Corporate(3)(4)","","Total"],["Sales","$","665,107","","","$","912,637","","","$","\u2014","","","$","\u2014","","","$","1,577,744"],["Cost of sales","464,260","","","730,804","","","\u2014","","","\u2014","","","1,195,064"],["Gross margin","200,847","","","181,833","","","\u2014","","","\u2014","","","382,680"],["Selling, general and administrative(5)","22,372","","","34,005","","","6,737","","","83,202","","","146,316"],["Operating income (loss)","178,475","","","147,828","","","(6,737)","","","(83,202)","","","236,364"],["Interest expense","\u2014","","","\u2014","","","\u2014","","","(81,282)","","","(81,282)"],["Equity in earnings of unconsolidated subsidiaries","\u2014","","","\u2014","","","16,163","","","\u2014","","","16,163"],["Other income (expense)","247","","","\u2014","","","\u2014","","","(809)","","","(562)"],["Income (loss) before income tax","$","178,722","","","$","147,828","","","$","9,426","","","$","(165,293)","","","$","170,683"]]
[[/GREPCENT_TABLE]]