AZZ Surpasses Expectations in Q3 2025: Strong Sales Growth and Improved Margins
The company AZZ has reported a strong performance in its third quarter of fiscal year 2025, exceeding expectations with significant sales growth and improved margins.
According to the conference call transcript, AZZ's consolidated third-quarter sales of $404 million increased by 5.8% compared to the same period last year, marking all organic growth. The Metal Coatings segment saw a 3.3% increase in overall sales, with galvanizing growing at 5.2%, while the Precoat Metals segment experienced a 7.6% rise in sales.
Both segments demonstrated strong volume-based momentum, with higher tonnage processed in fabricated steel and coal coating. The Metal Coatings segment delivered an EBITDA margin of 31.5%, exceeding the prior year's result and the company's targeted range of 25-30%. This was primarily due to higher volume and improved zinc productivity.
Precoat Metals also achieved a strong EBITDA margin of 19.1%, surpassing the previous year's performance, driven by higher volume, a more profitable mix of business, and improved operational performance.
The company's President and Chief Executive Officer, Tom Ferguson, praised the teams' focus, discipline, and execution in both segments, highlighting their ability to sustain margins while generating solid sales growth. He noted that the results were driven mainly by construction projects related to highways, new bridge construction, and infrastructure renovations throughout the U.S.
The company's strong free cash flow of $186 million for the first 9 months of the fiscal year allowed it to make substantial debt repayments of $80 million. This significant economic moat in Metal Coatings and Precoat Metals positions AZZ for continued growth and leadership in its markets.
AZZ also highlighted its commitment to organic growth and strategic bolt-on acquisitions to maintain and grow its market positions. The company's reputation for reliability, excellence in customer service, and trusted repeated customer relationships further enhance its value proposition.
