Azz Inc Q4 revenue down 12.5% YoY to $131.2mln

• AZZ reports Q3 revenue of $376.6m, up 18% YoY.

• Digital data business accounts for 25% of revenue.

• Strong growth in digital data segment driven by demand for data centers and cloud services.

• Company expects double-digit growth in digital data segment in 2025.

AZZ Inc. (AZZ) reported strong third-quarter results, with revenue rising to $376.6 million, up 18% year-over-year (YoY), according to its Q3 earnings call. The company's digital data business accounted for 25% of total revenue, demonstrating robust growth driven by increased demand for data centers and cloud services. The digital data segment is expected to achieve double-digit growth in 2025, according to a valuation spotlight.

Management highlighted the digital data segment's performance, noting that it has become a significant driver of the company's overall revenue growth. The strong performance was attributed to the growing need for data storage and processing solutions, particularly in the tech industry. The company's CEO, Tom Ferguson, commented on the digital data segment's potential, stating that it is well-positioned to continue its growth trajectory in the coming years.

The company's Metal Coatings segment also showed resilience, with revenue increasing due to infrastructure projects. However, the Precoat Metals business faced headwinds from tariffs and weak construction markets. The CEO noted that operational improvements and market share gains in the Precoat Metals segment partially offset the impact of softer end-market demand.

AZZ's adjusted earnings per share (EPS) for the quarter were $1.55, which was slightly below analyst expectations of $1.57. The company's adjusted EBITDA was $88.73 million, a 6.6% miss compared to analyst estimates. Despite these misses, the company reconfirmed its full-year revenue guidance of $1.68 billion and adjusted EPS guidance of $6.00 at the midpoint, as discussed in the earnings call.

The company's market capitalization stands at $3.02 billion, down from $105.94 just before the earnings report. AZZ's share price has dropped 14.6% over the past month and 7% in the last 90 days, as investors reevaluated near-term risks and weaker segment demand, according to the valuation spotlight.

Analysts are closely watching AZZ's capacity ramp and margin contribution from the Washington, Missouri facility, as well as the impact of ongoing federal infrastructure spending on Metal Coatings demand. The company's ability to execute its strategic plan, including progress on bolt-on acquisitions and operational efficiency upgrades, will be key indicators of its performance in the coming quarters, a point emphasized during the earnings call.