AZZ INCAZZ
AZZ INC Revenue Disclosure
Revenue recognition
Revenue is recognized when customers obtain control of goods or services, for contracts that have been approved and executed. Revenue is generally recognized over time. Contract assets are recorded when revenue is recognized before we have an unconditional right to payment, and contract liabilities are recorded when payment is received in advance.
AZZ Metal Coatings Segment
AZZ's Metal Coatings segment is a provider of hot-dip galvanizing, powder coating, anodizing and plating, and other metal coating applications to the steel fabrication and other industries. Within this segment, the contract is typically governed by a customer purchase order or work order. The contract generally specifies the delivery of what constitutes a single performance obligation consisting of metal coating services. We recognize sales over time as the metal coating is applied to customer provided material as the process enhances a customer-controlled asset. Contract modifications are rare within this segment and most contracts are on a fixed price basis with no variable consideration.
AZZ Precoat Metals Segment
AZZ Precoat Metals is a provider of advanced applications of protective and decorative coatings and related value-added services for steel and aluminum coil, primarily serving the construction, appliance, heating, ventilation, and air conditioning (HVAC), container, transportation and other end markets. Within this segment, the contract is typically governed by a customer purchase order or work order. The contract generally specifies the delivery of what constitutes a single performance obligation consisting of coating services, which may also include secondary services such as slitting, embossing or cut to length. We recognize sales over time as the coating is applied to customer-provided material, as the process enhances a customer-controlled asset. Contract modifications are rare within this segment and most contracts are on a fixed price basis; in certain cases, we may offer volume discounts, which are recorded as a reduction to sales and recognized over time in the same manner as the related revenue.
Contract Assets and Liabilities
The timing of revenue recognition, billings and cash collections results in accounts receivable, contract assets (unbilled receivables), and contract liabilities (customer advances and deposits) on the consolidated balance sheets. Our contract assets and contract liabilities are primarily related to the AZZ Precoat Metals segment. Customer billing can occur subsequent to revenue recognition, resulting in contract assets. In addition, we can receive advances from our customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period.
The increases or decreases in contract assets and contract liabilities during fiscal year 2026 were primarily due to normal timing differences between AZZ's performance and customer payments. Contract liabilities of $0.6 million, $0.5 million, and $1.0 million as of February 28, 2026, February 28, 2025, and February 29, 2024, respectively, are included in "Other accrued liabilities" in the consolidated balance sheets. The balance of contract assets was $112.8 million, $106.5 million, and $79.3 million as of February 28, 2026, February 28, 2025 and February 29, 2024, respectively. The balance of contract assets is primarily related to the AZZ Precoat Metals segment. Contract assets have increased in 2026 compared to 2025 as customers utilize Precoat Metals' extensive warehouse capabilities and position finished goods at Precoat Metals' central locations versus the customer's own individual warehouses. This increase reflects steel price volatility, steel availability, and market uncertainty resulting from economic policy changes. We recognized $0.5 million and $0.5 million of revenue for amounts that were included in contract liabilities as of February 28, 2026 and 2025, respectively.
Other
No general rights of return exist for customers; however, we provide assurance-type warranties and a provision for estimated warranties has been established. AZZ generally does not sell extended warranties. Revenue is recognized net of applicable sales and other taxes. We do not adjust the contract price for the effects of a significant financing component if we expect, at contract inception, that the period between when we transfer a good or service to a customer and when the customer pays for that good or service will be one year or less, which is generally the case. Shipping and handling is treated as a fulfillment obligation instead of a separate performance obligation and such costs are expensed as incurred.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Apr 22, 2026 | Showing above |
| 2025 | Apr 21, 2025 | |
| 2024 | Apr 22, 2024 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.