AZZ Inc (AZZ)

AZZ Inc. Annual Financial Report (10-K)

Report Date: 2025-04-28
Period Covered: Full Year ended February 28, 2025
Form Type: 10-K

Overview

AZZ Inc delivered record revenues of $1.578 billion in FY 2025, up 2.6% over FY 2024, driven by higher volumes in its Metal Coating and Precoat Metal segments. Net income from continuing operations rose to $128.8 million, or $1.79 diluted EPS, compared with $101.6 million ($1.46 EPS) in FY 2024.

Profit and Loss Analysis

• Revenue Growth: Metal Coating sales climbed 1.4% to $665.1 million; Precoat Metal sales increased 3.5% to $912.6 million.
• Gross Margin: Improved commodity costs management and fixed‐price zinc agreements helped maintain a combined gross margin of 24.3%.
• SG&A: Corporate SG&A rose modestly (+8.9%) due to higher incentive compensation and legal accruals.
• Operating Income: Increased 6.7% to $236.4 million; Metal Coating segment operating income grew 8.3%, Precoat Metal was up 5.8%.
• Interest & Taxes: Interest expense fell 24.0% on lower average debt and capitalized interest on new plant construction. The effective tax rate was 24.5%, up from 21.9% in FY 2024 due to state tax adjustments and lower one-time benefits.
• Net Income: $128.8 million vs. $101.6 million in FY 2024, a 26.7% increase.

Balance Sheet & Liquidity

• Debt: Gross debt is $900.3 million, down 10.8% year-over-year. Net leverage ratio improved to 2.5× EBITDA from 2.9×.
• Cash & Lines: $1.5 million of cash on hand and $3.5 billion undrawn revolving capacity.
• Capital Spend: $115.9 million invested in maintenance and growth capex, including $52.8 million on a new aluminum coil-coating plant in Missouri.
• Dividends & Share Repurchase: Paid $15.4 million in dividends; $17.1 million net share settlement for employee withholding; $231 million in dividends; 4.6 million shares repurchased under a 100 million-share authorization.

Pros & Cons

Pros:

• Resilient demand in construction and industrial end markets.
• Strong pricing discipline and fixed‐premium zinc contracts mitigate commodity volatility.
• Healthier balance sheet with lower leverage and flexible revolving credit.

Cons:

• Exposure to cyclical end-markets; seasonal Q4 weakness from winter weather.
• Ongoing legal contingencies (jury verdicts, settlements) may drive volatility.
• Partial exposure to variable rates until September 2025 interest swaps mature.

Revenue by End Market (FY 2025):
• Construction: $893.1 M (56.6%)
• Industrial: $129.5 M (8.2%)
• Consumer: $123.1 M (7.8%)
• Transportation: $140.6 M (8.9%)
• Utility: $127.5 M (8.1%)
• Other: $163.8 M (10.4%)

Segment Sales (FY 2025):
• Metal Coating: $665.1 M
• Precoat Metal: $912.6 M
• Infrastructure Solutions (equity method): $528.1 M sale equivalent

EBITDA by Segment (FY 2025):
• Metal Coating: $205.4 M
• Precoat Metal: $179.0 M
• Infrastructure Solutions: $15.9 M
• Corporate Costs: $(52.4 M)**

AZZ’s financial health is solid, with improving leverage and strong cash flow generation. The company’s strategic focus on value-added coatings and a growing coil-coating footprint positions it well for moderate economic recoveries. Key growth drivers include the commissioning of the new Missouri facility in FY 2026, which will broaden the Precoat Metal offering. Potential challenges include cyclical headwinds in industrial and construction markets, legal and environmental liabilities, and the need to replace interest rate hedges after September 2025. Overall, AZZ is on a stable trajectory with a balanced risk profile and clear growth initiatives in place.