UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~May 31,~~November 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 1-12777

AZZ Inc.

(Exact name of registrant as specified in its charter)


Texas		75-0948250
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Museum Place, Suite 500
3100 West 7th Street
Fort Worth,	Texas	76107
(Address of principal executive offices)		(Zip Code)

(817) 810-0095

(Registrant’s telephone number, including area code)

~~NONE~~

~~(Former name, former address and former fiscal year, if changed since last report)~~

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock

AZZ

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~June~~December 30, 2021 the registrant had outstanding ~~25,071,582~~24,692,698 shares of common stock; $1.00 par value per share.

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AZZ INC.

INDEX

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AZZ INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

~~(Unaudited)~~

May 31, 2021 February 28, 2021
Assets
Current assets:
Cash and cash equivalents $ 12,403 $ 14,837
Accounts receivable (net of allowance for credit losses of $5,362 as of May 31, 2021 and $5,713 as of February 28, 2021) 134,531 128,127
Inventories:
Raw material 92,283 86,913
Work-in-process 6,214 4,453
Finished goods 1,453 1,546
Contract assets 71,185 58,056
Prepaid expenses and other 11,211 5,876
Assets held for sale 5,628 3,684
Total current assets 334,908 303,492
Property, plant and equipment, net 207,689 205,909
Operating lease right-of-use assets 48,698 37,801
Goodwill 354,839 353,881
Intangibles and other assets, net 93,105 95,359
Total assets $ 1,039,239 $ 996,442
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 48,831 $ 41,034
Income tax payable 4,778 0
Accrued salaries and wages 16,614 22,606
Other accrued liabilities 36,278 27,136
Customer deposits 421 348
Contract liabilities 17,098 16,138
Lease liability, short-term 7,174 6,588
Total current liabilities 131,194 113,850
Debt due after one year, net 185,435 178,419
Lease liability, long-term 40,702 32,629
Deferred income taxes 38,467 39,283
Other long-term liabilities 6,030 8,969
Total liabilities 401,828 373,150
Commitments and contingencies 0 0
Shareholders’ equity:
Common stock, $1 par, shares authorized 100,000; 25,071 shares issued and outstanding at May 31, 2021 and 25,108 shares issued and outstanding at February 28, 2021 25,071 25,108
Capital in excess of par value 75,600 75,979
Retained earnings 559,173 547,289
Accumulated other comprehensive loss (22,433) (25,084)
Total shareholders’ equity 637,411 623,292
Total liabilities and shareholders' equity $ 1,039,239 $ 996,442
Unaudited)


	November 30, 2021		February 28, 2021
Assets
Current assets:
Cash and cash equivalents	$	20,355	$	14,837
Accounts receivable (net of allowance for credit losses of $5,190 as of November 30, 2021 and $5,713 as of February 28, 2021)	144,764		128,127
Inventories:
Raw material	99,777		86,913
Work-in-process	6,152		4,453
Finished goods	1,041		1,546
Contract assets	67,884		58,056
Prepaid expenses and other	5,153		5,876
Assets held for sale	4,409		3,684
Total current assets	349,535		303,492
Property, plant and equipment, net	199,886		205,909
Operating lease right-of-use assets	45,050		37,801
Goodwill	353,434		353,881
Deferred Tax Assets	5,649		3,969
Intangibles and other assets, net	84,022		91,390
Total assets	$	1,037,576	$	996,442
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	42,457	$	41,034
Income tax payable	3,200		—
Accrued salaries and wages	23,791		22,606
Other accrued liabilities	26,478		27,136
Customer deposits	721		348
Contract liabilities	14,733		16,138
Lease liability, short-term	7,277		6,588


Total current liabilities	118,657		113,850
Debt due after one year, net	191,468		178,419
Lease liability, long-term	37,395		32,629
Deferred income taxes	36,121		39,283
Other long-term liabilities	5,891		8,969
Total liabilities	389,532		373,150
Commitments and contingencies	0		0
Shareholders’ equity:
Common stock, $1 par, shares authorized 100,000; 24,693 shares issued and outstanding at November 30, 2021 and 25,108 shares issued and outstanding at February 28, 2021	24,693		25,108
Capital in excess of par value	81,747		75,979
Retained earnings	568,641		547,289
Accumulated other comprehensive loss	(27,037)		(25,084)
Total shareholders’ equity	648,044		623,292
Total liabilities and shareholders' equity	$	1,037,576	$	996,442

The accompanying notes are an integral part of the condensed consolidated financial statements.

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AZZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


		Three Months Ended May 31,				Three Months Ended November 30,				Nine Months Ended November 30,
		2021		2020				2021		2020		2021		2020

Sales	Sales	$	229,826	$	213,293		Sales	$	231,737	$	226,623	$	678,010	$	643,287
Cost of sales	Cost of sales	171,899		171,085			Cost of sales	174,773		171,948		508,004		500,311
Gross margin	Gross margin	57,927		42,208			Gross margin	56,964		54,675		170,006		142,976

Selling, general and administrative	Selling, general and administrative	27,215		27,890			Selling, general and administrative	26,872		25,228		82,674		79,867

Restructuring and impairment charges							Restructuring and impairment charges	—		1,576		—		20,269
Operating income	Operating income	30,712		14,318			Operating income	30,092		27,871		87,332		42,840

Interest expense	Interest expense	1,697		2,634			Interest expense	1,630		2,272		5,081		7,376

Other (income) expense, net	Other (income) expense, net	(969)		1,456			Other (income) expense, net	1,413		(724)		1,362		823
Income before income taxes	Income before income taxes	29,984		10,228			Income before income taxes	27,049		26,323		80,889		34,641
Income tax expense	Income tax expense	7,647		4,687			Income tax expense	5,964		6,620		18,489		11,187
Net income	Net income	$	22,337	$	5,541		Net income	$	21,085	$	19,703	$	62,400	$	23,454
Earnings per common share	Earnings per common share						Earnings per common share
Basic earnings per share	Basic earnings per share	$	0.89	$	0.21		Basic earnings per share	$	0.85	$	0.76	$	2.51	$	0.90
Diluted earnings per share	Diluted earnings per share	$	0.88	$	0.21		Diluted earnings per share	$	0.85	$	0.76	$	2.48	$	0.90

Cash dividends declared per common share	Cash dividends declared per common share	$	0.17	$	0.17		Cash dividends declared per common share	$	0.17	$	0.17	$	0.51	$	0.51

The accompanying notes are an integral part of the condensed consolidated financial statements.

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AZZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


		Three Months Ended May 31,
		2021		2020			Three Months Ended November 30,				Nine Months Ended November 30,
							2021		2020		2021		2020
Net income	Net income	$	22,337	$	5,541	Net income	$	21,085	$	19,703	$	62,400	$	23,454
Other comprehensive income (loss):	Other comprehensive income (loss):					Other comprehensive income (loss):
Foreign currency translation adjustments, net of income tax of $0	Foreign currency translation adjustments, net of income tax of $0	2,581		(1,039)		Foreign currency translation adjustments, net of income tax of $0	(1,508)		255		(1,953)		3,756
Interest rate swap, net of income tax of $0 and $7, respectively		0		(14)
Interest rate swap, net of income tax of $0, $7, $0 and $22, respectively						Interest rate swap, net of income tax of $0, $7, $0 and $22, respectively	—		(14)		—		(42)
Other comprehensive income (loss)	Other comprehensive income (loss)	2,581		(1,053)		Other comprehensive income (loss)	(1,508)		241		(1,953)		3,714
Comprehensive income	Comprehensive income	$	24,918	$	4,488	Comprehensive income	$	19,577	$	19,944	$	60,447	$	27,168

The accompanying notes are an integral part of the condensed consolidated financial statements.

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AZZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Three Months Ended May 31,					Nine Months Ended November 30,
		2021		2020			2021		2020
Cash Flows From Operating Activities	Cash Flows From Operating Activities					Cash Flows From Operating Activities
Net income	Net income	$	22,337	$	5,541	Net income	$	62,400	$	23,454
Adjustments to reconcile net income to net cash provided by (used in) operating activities:	Adjustments to reconcile net income to net cash provided by (used in) operating activities:					Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Bad debt expense	Bad debt expense	(218)		129		Bad debt expense	(493)		233
Amortization and depreciation	Amortization and depreciation	11,084		11,668		Amortization and depreciation	33,222		34,176
Deferred income taxes	Deferred income taxes	(892)		(2,147)		Deferred income taxes	(4,955)		(4,660)

Loss on disposal of business						Loss on disposal of business	552		3,050
Loss on abandonment of long-lived assets						Loss on abandonment of long-lived assets	—		6,922
Loss on disposal group held for sale						Loss on disposal group held for sale	—		7,030
Inventory write-downs						Inventory write-downs	—		2,511
Net (gain) loss on sale of property, plant and equipment	Net (gain) loss on sale of property, plant and equipment	(15)		40		Net (gain) loss on sale of property, plant and equipment	238		—
Amortization of deferred borrowing costs	Amortization of deferred borrowing costs	139		135		Amortization of deferred borrowing costs	551		503
Share-based compensation expense	Share-based compensation expense	1,811		1,766		Share-based compensation expense	6,542		5,773
Effects of changes in assets and liabilities, net of acquisitions and dispositions:	Effects of changes in assets and liabilities, net of acquisitions and dispositions:					Effects of changes in assets and liabilities, net of acquisitions and dispositions:
Accounts receivable	Accounts receivable	(7,966)		8,721		Accounts receivable	(18,844)		9,715
Inventories	Inventories	(8,254)		(4,449)		Inventories	(16,703)		(1,763)
Prepaid expenses and other	Prepaid expenses and other	(5,419)		(941)		Prepaid expenses and other	680		2,327
Other assets	Other assets	(778)		123		Other assets	(2,559)		226
Net change in contract assets and liabilities	Net change in contract assets and liabilities	(9,839)		3,168		Net change in contract assets and liabilities	(10,719)		(15,297)
Accounts payable	Accounts payable	6,321		(15,328)		Accounts payable	471		(7,026)
Other accrued liabilities and income taxes payable	Other accrued liabilities and income taxes payable	2,749		(19,610)		Other accrued liabilities and income taxes payable	(715)		(7,780)
Net cash provided by (used in) operating activities		11,060		(11,184)
Net Cash Provided by Operating Activities						Net Cash Provided by Operating Activities	49,668		59,394
Cash Flows From Investing Activities	Cash Flows From Investing Activities					Cash Flows From Investing Activities
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	23		0		Proceeds from sale of property, plant and equipment	2,706		454
Purchase of property, plant and equipment	Purchase of property, plant and equipment	(7,489)		(10,847)		Purchase of property, plant and equipment	(19,131)		(27,885)
Proceeds from sale of subsidiaries, net						Proceeds from sale of subsidiaries, net	—		12,444

Net cash used in investing activities		(7,466)		(10,847)
Net Cash Used in Investing Activities						Net Cash Used in Investing Activities	(16,425)		(14,987)
Cash Flows From Financing Activities	Cash Flows From Financing Activities					Cash Flows From Financing Activities

Proceeds from issuance of common stock						Proceeds from issuance of common stock	1,544		1,694
Payments for taxes related to net share settlement of equity awards	Payments for taxes related to net share settlement of equity awards	(2,101)		(539)		Payments for taxes related to net share settlement of equity awards	(2,169)		(646)
Proceeds from revolving loan	Proceeds from revolving loan	35,000		76,000		Proceeds from revolving loan	216,000		161,000
Payments on revolving loan	Payments on revolving loan	(28,000)		(60,000)		Payments on revolving loan	(203,000)		(182,000)

Repurchase and retirement of treasury stock	Repurchase and retirement of treasury stock	(6,264)		0		Repurchase and retirement of treasury stock	(28,869)		(30,953)
Payments of dividends	Payments of dividends	(4,245)		(4,425)		Payments of dividends	(12,673)		(13,324)
Net cash (used in) provided by financing activities		(5,610)		11,036
Net Cash Used in Financing Activities						Net Cash Used in Financing Activities	(29,167)		(64,229)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(418)		722		Effect of exchange rate changes on cash	1,442		2,330
Net decrease in cash and cash equivalents		(2,434)		(10,273)
Net Increase (Decrease) in Cash and Cash Equivalents						Net Increase (Decrease) in Cash and Cash Equivalents	5,518		(17,492)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	14,837		36,687		Cash and cash equivalents at beginning of period	14,837		36,687
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	12,403	$	26,414	Cash and cash equivalents at end of period	$	20,355	$	19,195

Supplemental disclosures	Supplemental disclosures					Supplemental disclosures
Cash paid for interest	Cash paid for interest	$	394	$	869	Cash paid for interest	$	3,655	$	5,241
Cash paid for income taxes	Cash paid for income taxes	$	1,322	$	11	Cash paid for income taxes	$	23,259	$	15,208

The accompanying notes are an integral part of the condensed consolidated financial statements.

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AZZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)

Three Months Ended May 31, 2021
Common Stock Capital in
Excess of
Par Value Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total
Shares Amount
Balance at February 28,2021 25,108 $ 25,108 $ 75,979 $ 547,289 $ (25,084) $ 623,292
Share-based compensation expense — — 1,811 — — 1,811
Common stock issued under stock-based plans and related income tax expense 89 89 (2,190) — — (2,101)
Repurchase and retirement of common stock (126) (126) — (6,138) — (6,264)
Cash dividends paid — — — (4,245) — (4,245)
Net income — — — 22,337 — 22,337
Foreign currency translation — — — (70) 2,651 2,581
Balance at May 31, 2021 25,071 $ 25,071 $ 75,600 $ 559,173 $ (22,433) $ 637,411


	Three Months Ended November 30, 2021
	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total

	Shares	Amount
Balance at August 31, 2021	24,840	$	24,840	$	79,908	$	559,207	$	(25,529)	$	638,426
Share-based compensation	—	—		1,860		—		—		1,860
Common stock issued under stock-based plans and related income tax expense	1	1		(21)		—		—		(20)

Repurchase and retirement of treasury shares	(148)	(148)		—		(7,488)		—		(7,636)
Cash dividends paid	—	—		—		(4,163)		—		(4,163)
Net income	—	—		—		21,085		—		21,085
Foreign currency translation	—	—		—		—		(1,508)		(1,508)

Balance at November 30, 2021	24,693	$	24,693	$	81,747	$	568,641	$	(27,037)	$	648,044

	Nine Months Ended November 30, 2021
	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total

	Shares	Amount
Balance at February 28, 2021	25,108	$	25,108	$	75,979	$	547,289	$	(25,084)	$	623,292
Share-based compensation	—	—		6,542		—		—		6,542
Common stock issued under stock-based plans and related income tax expense	108	108		(2,277)		—		—		(2,169)
Common stock issued under employee stock purchase plan	41	41		1,503		—		—		1,544
Repurchase and retirement of treasury shares	(564)	(564)		—		(28,305)		—		(28,869)
Cash dividends paid	—	—		—		(12,673)		—		(12,673)
Net income	—	—		—		62,400		—		62,400
Foreign currency translation	—	—		—		(70)		(1,953)		(2,023)

Balance at November 30, 2021	24,693	$	24,693	$	81,747	$	568,641	$	(27,037)	$	648,044

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AZZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)


		Three Months Ended May 31, 2020															Three Months Ended November 30, 2020
		Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total					Common Stock							Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total

		Shares	Amount														Shares			Amount
Balance at February 28, 2020		26,148	$	26,148							$	66,703			$	572,414		$	(30,899)			$	634,366
Balance at August 31, 2020														Balance at August 31, 2020			26,076			$	26,076			$	71,797	$	561,094	$	(27,426)	$	631,541
Share-based compensation	Share-based compensation	—	—		1,766		—		—			1,766		Share-based compensation			—			—				1,690		—		—		1,690
Common stock issued under stock-based plans and related income tax expense	Common stock issued under stock-based plans and related income tax expense	47	47		(586)		—		—			(539)		Common stock issued under stock-based plans and related income tax expense			6			6				(97)		—		—		(91)

Repurchase and retirement of treasury shares														Repurchase and retirement of treasury shares			(652)			(652)				—		(23,922)		—		(24,574)
Cash dividends paid														Cash dividends paid			—			—				—		(4,432)		—		(4,432)
Net Income														Net Income			—			—				—		19,703		—		19,703
Foreign currency translation														Foreign currency translation			—			—				—		—		255		255
Interest rate swap														Interest rate swap			—			—				—		—		(14)		(14)
Balance at November 30, 2020														Balance at November 30, 2020			25,430			$	25,430			$	73,390	$	552,443	$	(27,185)	$	624,078

																	Nine Months Ended November 30, 2020
																	Common Stock							Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total

																	Shares			Amount
Balance at February 29, 2020														Balance at February 29, 2020			26,148			$	26,148			$	66,703	$	572,414	$	(30,899)	$	634,366
Share-based compensation														Share-based compensation			—			—				5,773		—		—		5,773
Common stock issued under stock-based plans and related income tax expense														Common stock issued under stock-based plans and related income tax expense			76			76				(722)		—		—		(646)
Common stock issued under employee stock purchase plan														Common stock issued under employee stock purchase plan			58			58				1,636		—		—		1,694
Repurchase and retirement of treasury shares														Repurchase and retirement of treasury shares			(852)			(852)				—		(30,101)		—		(30,953)
Cash dividends paid	Cash dividends paid	—	—		—		(4,425)		—			(4,425)		Cash dividends paid			—			—				—		(13,324)		—		(13,324)
Net income	Net income	—	—		—		5,541		—			5,541		Net income			—			—				—		23,454		—		23,454
Foreign currency translation	Foreign currency translation	—	—		—		—		(1,039)			(1,039)		Foreign currency translation			—			—				—		—		3,756		3,756
Interest rate swap	Interest rate swap	—	—		—		—		(14)			(14)		Interest rate swap			—			—				—		—		(42)		(42)
Balance at May 31, 2020		26,195	$	26,195	$	67,883	$	573,530	$	(31,952)		$	635,656
Balance at November 30, 2020														Balance at November 30, 2020			25,430			$	25,430			$	73,390	$	552,443	$	(27,185)	$	624,078

The accompanying notes are an integral part of the condensed consolidated financial statements.

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AZZ INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.The Company and Basis of Presentation

AZZ Inc. (“AZZ”, the “Company”, "our" or “we”) was established in 1956 and incorporated under the laws of the state of Texas. The Company is a global provider of metal coating solutions, welding solutions, specialty electrical equipment and highly engineered services to the power generation, transmission, distribution, refining and industrial markets. The Company has 2two distinct operating segments: the Metal Coatings segment and the Infrastructure Solutions segment. AZZ Metal Coatings provides hot dip galvanizing, spin galvanizing, powder coating, anodizing and plating, and other metal coating applications to the steel fabrication and other industries through 39 galvanizing plants and six surface technologies facilities located ~~throughout~~in the United States and Canada. AZZ Infrastructure Solutions is dedicated to delivering safe and reliable transmission of power from generation sources to end customers, and automated weld overlay solutions for corrosion and erosion mitigation to critical infrastructure in markets worldwide.

Presentation

The accompanying condensed consolidated balance sheet as of February 28, 2021 was derived from audited financial statements, and the unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. These financial statements should be read in conjunction with the audited financial statements and related notes for the fiscal year ended February 28, 2021, included in the Company’s Annual Report on Form 10-K covering such period. Certain previously reported amounts have been reclassified to conform to current period presentation.

The Company's fiscal year ends on the last day of February and is identified as the fiscal year for the calendar year in which it ends. For example, the fiscal year ending February 28, 2022 is referred to as fiscal 2022.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, which are necessary to present fairly the financial position of the Company as of ~~May 31,~~November 30, 2021, the results of its operations for the three and nine months ended ~~May 31,~~November 30, 2021 and 2020, and cash flows for the ~~three~~nine months ended ~~May 31,~~November 30, 2021 and 2020. The interim results reported herein are not necessarily indicative of results for a full year. Certain previously reported amounts have been reclassified to conform to current period presentation.

Coronavirus (COVID-19)

~~In March 2020, the World Health Organization declared the viral strain of coronavirus ("COVID-19") a global pandemic and recommended containment and mitigation measures worldwide.~~ The ~~spread of~~continued uncertainty associated with COVID-19, and any of the ~~resulting economic contraction has resulted in increased business uncertainty. The~~ongoing variants, did not have a material adverse effect on the Company's results of operations for the three and nine months ended November 30, 2021. While the Company continues to ~~be impacted by~~support its customers, there remains uncertainties regarding the ~~inability~~duration and, to what extent, if any, that the COVID-19 pandemic, or newly identified variants, or additional regulatory requirements, will ultimately have on the demand for the Company's products and services or with its ~~Infrastructure Solutions Industrial platform~~supply chain or its employees.

The impact of COVID-19 to ~~access certain customer sites to perform services, temporary slow-downs in order placements in~~ the ~~Infrastructure Solutions Electrical platform,~~Company's personnel and ~~increased costs associated with maintaining safe~~ operations ~~across the entire business. The Company~~ has been ~~able~~limited. During the third quarter of fiscal 2022, the Company continued to ~~remain open~~see improvement in sales and operating income in both of its operating segments. However, labor market and supply chain challenges have increased during the ~~entirety~~current quarter, resulting in increased operating expenses as the constrained labor market and supply chain disruptions impacted the availability and cost of labor and materials. In addition, new vaccine mandates were announced on September 9, 2021. Since the most current pronouncements indicate the mandates must be implemented by January 10, 2022, the extent of the ~~pandemic to service its customers. The Company~~regulatory impact is unclear at this time and could potentially have an adverse impact on our future operations. We cannot reasonably estimate the ~~length or~~ severity of this pandemic or the government's mandates regarding the same, or the extent to which the disruption may materially impact ~~its~~our consolidated balance ~~sheet,~~sheets, statements of ~~operations~~income or statements of cash flows for fiscal year 2022 or beyond.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes ("ASU 2019-12"). This standard is intended to simplify the accounting and disclosure requirements for income taxes by eliminating various exceptions in accounting for income taxes as well as clarifying and amending existing guidance to improve consistency in the application of ASC 740. The standard was effective for the

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Company in the first quarter of its fiscal 2022. The Company adopted ASU 2019-12 in the first quarter of fiscal 2022 and the adoption did not have a material impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

In March 2020 and as clarified in January 2021, the FASB issued Accounting Standards Update No. (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial

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Reporting” (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. ~~The amendments are effective immediately for all entities.~~ An entity may elect to apply the amendments on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date between March 12, 2020 and December 31, 2022. The Company has not adopted ASU 2020-04, inbut will continue to evaluate the ~~first quarter~~possible adoption of ~~fiscal 2022 and~~any such expedients or exceptions, as well as the ~~adoption did not have a material~~ impact on its financial condition, results of operations, and cash ~~flows.~~flows, during the effective period.

2.Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by giving effect to the potential dilution that could occur if stock awards vested and were converted into common shares during the period.

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):


		Three Months Ended May 31,				Three Months Ended November 30,				Nine Months Ended November 30,
		2021		2020				2021		2020		2021		2020
Numerator:	Numerator:						Numerator:
Net income for basic and diluted earnings per common share	Net income for basic and diluted earnings per common share	$22,337		$5,541			Net income for basic and diluted earnings per common share	$	21,085	$	19,703	$	62,400	$	23,454
Denominator:	Denominator:						Denominator:
Denominator for basic earnings per common share–weighted average shares	Denominator for basic earnings per common share–weighted average shares	25,051		26,157			Denominator for basic earnings per common share–weighted average shares	24,729		25,936		24,910		26,090
Effect of dilutive securities:	Effect of dilutive securities:						Effect of dilutive securities:
Employee and director equity awards		219		35
Employee and Director stock awards							Employee and Director stock awards	216		115		222		87
Denominator for diluted earnings per common share	Denominator for diluted earnings per common share	25,270		26,192			Denominator for diluted earnings per common share	24,945		26,051		25,132		26,177
Earnings per share basic and diluted:	Earnings per share basic and diluted:						Earnings per share basic and diluted:
Basic income per common share		$	0.89	$	0.21
Diluted income per common share		$	0.88	$	0.21
Basic earnings per common share							Basic earnings per common share	$	0.85	$	0.76	$	2.51	$	0.90
Diluted earnings per common share							Diluted earnings per common share	$	0.85	$	0.76	$	2.48	$	0.90

For the three and nine months ended ~~May 31,~~November 30, 2021, ~~154,259~~150,171 and 137,186 shares, respectively, were excluded from the calculation of diluted EPS because the effect would be antidilutive. For the three and nine months ended November 30, 2020, 80,148 and 128,918 shares, respectively, were excluded from the calculation of diluted EPS because the effect would be antidilutive. These shares could be dilutive in future periods.

3.~~Sales~~

~~Disaggregated Sales~~

~~The following table presents disaggregated sales by customer industry (in thousands):~~

Three Months Ended May 31,
2021 2020
Sales:
Industrial $ 153,983 $ 130,109
Transmission and distribution 43,667 49,057
Power generation 32,176 34,127
Total sales $ 229,826 $ 213,293

~~See Note 4 for sales information by segment.~~

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3.Sales

Disaggregated Sales

The following table presents disaggregated sales by customer industry (in thousands):


	Three Months Ended November 30,				Nine Months Ended November 30,
	2021		2020		2021		2020
Sales:
Industrial	$	141,360	$	138,240	$	420,367	$	335,462
Transmission and distribution	57,934		56,656		149,162		203,332
Power generation	32,443		31,727		108,481		104,493
Total sales	$	231,737	$	226,623	$	678,010	$	643,287

See Note 4 for sales information by segment.

Contract Liabilities

The timing of sales 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, primarily related to our Infrastructure Solutions segment. Amounts are billed as work progresses in accordance with agreed upon contractual terms, either at periodic intervals (e.g., weekly or monthly) or upon the achievement of contractual milestones. Billing can occur subsequent to sales recognition, resulting in contract assets. In addition, we sometimes receive advances or deposits from our customers, before sales are 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 following table shows the changes in contract liabilities for the ~~three~~nine months ended ~~May 31,~~November 30, 2021 and 2020, respectively (in thousands):


		2021		2020			2021		2020
Balance at February 28/29,	Balance at February 28/29,	$	16,138	$	18,418	Balance at February 28/29,	$	16,138	$	18,418
Contract liabilities added during the period	Contract liabilities added during the period	12,375		4,796		Contract liabilities added during the period	8,203		5,017
Sales recognized during the period	Sales recognized during the period	(11,415)		(5,849)		Sales recognized during the period	(9,608)		(11,914)
Balance at May 31,		$	17,098	$	17,365
Balance at November 30,						Balance at November 30,	$	14,733	$	11,521

The Company did not record any sales for the ~~three~~nine months ended ~~May 31,~~November 30, 2021 or 2020 related to performance obligations satisfied in prior periods. The increases or decreases in accounts receivable, contract assets, and contract liabilities during the three months ended May 31, 2021 and 2020 were due primarily to normal timing differences between the Company’s performance and customer payments in fiscal 2021.

~~The~~ Company expects to recognize sales, related to the ~~$17.1~~$14.7 million balance of contract liabilities as of ~~May 31,~~November 30, 2021 of approximately ~~$12.1~~$3.6 million, ~~$4.7~~$9.9 million, ~~$0.2~~$1.0 million and ~~$0.1~~$0.2 million in fiscal 2022, 2023, 2024 and 2025, respectively.

4.Operating Segments

Segment Information

The Company has 2 distinct operating segments: the Metal Coatings segment and the Infrastructure Solutions segment.

The Metal Coatings segment provides hot dip galvanizing, spin galvanizing, powder coating, anodizing and plating, and other metal coating applications to the steel fabrication and other industries through facilities located throughout the United States and Canada. Hot dip galvanizing is a metallurgical process in which molten zinc reacts to steel. The zinc alloying provides corrosion protection toand extends the life-cycle of fabricated steel for ~~extended periods of up to 50 years.~~several decades.

The Infrastructure Solutions segment provides specialized products and services designed to support primarily industrial and electrical applications. The product offerings include custom switchgear, electrical enclosures, medium and high voltage bus ducts, explosion proof and hazardous duty lighting and tubular products. The Infrastructure Solutions segment also focuses on life-cycle extension for the power generation, refining and industrial infrastructure, through providing automated weld overlay solutions for corrosion and erosion mitigation.

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Sales and operating income by segment for each period were as follows (in thousands):

Three Months Ended May 31,
2021 2020
Sales:
Metal Coatings $ 127,735 $ 118,991
Infrastructure Solutions 102,091 94,302
Total sales $ 229,826 $ 213,293
Operating income:
Metal Coatings $ 31,576 $ 25,085
Infrastructure Solutions 9,624 (1,048)
Corporate (10,488) (9,719)
Total operating income $ 30,712 $ 14,318

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	Three Months Ended November 30,				Nine Months Ended November 30,
	2021		2020		2021		2020
Sales:
Metal Coatings	$	133,373	$	115,616	$	390,701	$	351,643
Infrastructure Solutions	98,364		111,007		287,309		291,644
Total sales	$	231,737	$	226,623	$	678,010	$	643,287

Operating income:
Metal Coatings	$	32,724	$	28,671	$	95,888	$	69,355
Infrastructure Solutions	9,189		8,722		25,838		3,364
Corporate	(11,821)		(9,522)		(34,394)		(29,879)
Total operating income	$	30,092	$	27,871	$	87,332	$	42,840

Asset balances by segment for each period were as follows (in thousands):


		May 31, 2021		February 28, 2021			November 30, 2021		February 28, 2021
Total assets:	Total assets:					Total assets:
Metal Coatings	Metal Coatings	$	490,326	$	480,778	Metal Coatings	$	493,700	$	480,778
Infrastructure Solutions	Infrastructure Solutions	521,428		489,986		Infrastructure Solutions	515,987		489,986
Corporate	Corporate	27,485		25,678		Corporate	27,889		25,678
Total	Total	$	1,039,239	$	996,442	Total	$	1,037,576	$	996,442

Financial Information About Geographical Areas

The following table presents sales by geographic region for each period ~~(dollars in~~(in thousands):


		Three Months Ended May 31,				Three Months Ended November 30,				Nine Months Ended November 30,
		2021		2020				2021		2020		2021		2020
Sales:	Sales:						Sales:
United States	United States	$	191,116	$	190,842		United States	$	202,998	$	180,429	$	586,584	$	540,162
International	International	38,710		22,451			International	28,739		46,194		91,426		103,125
Total	Total	$	229,826	$	213,293		Total	$	231,737	$	226,623	$	678,010	$	643,287

The following table presents fixed assets by geographic region for each period ~~(dollars in~~(in thousands):


		May 31, 2021		February 28, 2021			November 30, 2021		February 28, 2021
Property, plant and equipment, net:	Property, plant and equipment, net:					Property, plant and equipment, net:
United States	United States	$	180,004	$	180,718	United States	$	178,020	$	180,718
Canada	Canada	14,953		15,007		Canada	11,968		15,007
Other countries	Other countries	12,732		10,184		Other countries	9,898		10,184
Total	Total	$	207,689	$	205,909	Total	$	199,886	$	205,909

5.Warranty Reserves

A reserve has been established to provide for the estimated future cost of warranties on certain delivered products. The warranty accrual is included in "Other accrued liabilities" on the condensed consolidated balance sheets. Management monitors

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established reserves and adjusts warranty estimates based upon the progression of resolution activities with the Company's customers. Warranties typically cover non-conformance to customer specifications or defects in material and workmanship.

The following table shows the changes in the warranty reserves for the ~~three~~nine months ended ~~May 31,~~November 30, 2021 ~~(dollars in~~and 2020 (in thousands):


~~Balance at February 28, 2021~~	$	~~4,079~~
~~Warranty costs incurred~~	~~(112)~~
~~Additions charged to income~~	~~170~~

~~Balance at May 31, 2021~~	$	~~4,137~~


	Nine Months Ended November 30,
	2021		2020
Beginning balance	$	4,079	$	3,702
Warranty costs incurred	(357)		(1,251)
Additions charged to income	492		1,073
Transferred to held for sale	—		(478)
Ending balance	$	4,214	$	3,046

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6.Debt

The Company's debt consisted of the following for each of the periods presented ~~(dollars in~~(in thousands):


		May 31, 2021		February 28, 2021			November 30, 2021		February 28, 2021
2017 Revolving Credit Facility		$	36,000	$	29,000
Revolving Credit Facility						Revolving Credit Facility	$	42,000	$	29,000

2020 Senior Notes	2020 Senior Notes	150,000		150,000		2020 Senior Notes	150,000		150,000
Total debt, gross	Total debt, gross	186,000		179,000		Total debt, gross	192,000		179,000
Unamortized debt issuance costs	Unamortized debt issuance costs	(565)		(581)		Unamortized debt issuance costs	(532)		(581)
Total debt, net		185,435		178,419
Less amount due within one year		0		0
Debt due after one year, net		$	185,435	$	178,419

Total debt, net						Total debt, net	$	191,468	$	178,419

The Company's debt agreements require the Company to maintain certain financial ratios, of which the most restrictive is a debt to EBITDA leverage ratio of at least 3.25 to 1.00. As of ~~May 31,~~November 30, 2021, the Company was in compliance with all covenants or other requirements set forth in the debt agreements.

On July 8, 2021, the Company refinanced its current unsecured revolving credit facility, which was scheduled to mature in March 2022, with a new five-year senior unsecured revolving credit facility, dated July 8, 2021 by and among the Company, borrower, Citibank, N.A., as administrative agent and the other agents and lender parties thereto (the “2021 Credit Agreement”). The 2021 Credit Agreement matures in July 2026 and includes the following significant terms;

i.provides for a senior unsecured revolving credit facility with a principal amount of up to $400.0 million revolving loan commitments, and includes an additional $200.0 million uncommitted incremental accordion facility;

ii.interest rate margin ranges from 87.5 basis points ("bps") to 175 bps for Eurodollar Rate loans, and from 0.0 bps to 75 bps for Base Rate loans (as defined in the 2021 Credit Agreement), depending on leverage ratio of the Company and its consolidated subsidiaries as a group;

iii.includes a letter of credit sub-facility up to $85.0 million for the issuance of standby and commercial letters of credit,

iv.includes a $50.0 million sublimit for swing line loans;

v.includes customary representations and warranties, affirmative covenants and negative covenants, and events of default; including restrictions on incurrence of non-ordinary course debt, investment and dividends, subject to various exceptions, carve-outs and baskets; and

vi.includes a maximum leverage ratio financial covenant and an interest coverage ratio financial covenant, each to be tested at each quarter end.

The proceeds of the advances under the 2021 Credit Agreement are to be utilized primarily to finance working capital needs, capital improvements, dividends, acquisitions and for general corporate purposes.

The foregoing summary of material terms and provisions of the 2021 Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the 2021 Credit Agreement, a copy of which is attached hereto as Exhibit 10.3 to this Form 10-Q and is incorporated herein by reference.

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7.Leases

The Company is a lessee under various operating leases for facilities and equipment. Supplemental information related to the Company's portfolio of operating leases was as follows ~~(dollars in~~(in thousands):


		Three Months Ended May 31,						Three Months Ended November 30,				Nine Months Ended November 30,
		2021			2020					2021		2020		2021		2020
Operating cash flows from operating leases included in lease liabilities	Operating cash flows from operating leases included in lease liabilities	$	2,299		$	2,119			Operating cash flows from operating leases included in lease liabilities	$	2,338	$	2,069	$	6,780	$	6,313
Lease liabilities obtained from new ROU assets - operating	Lease liabilities obtained from new ROU assets - operating	12,661			204				Lease liabilities obtained from new ROU assets - operating	376		—		13,646		1,529
Weighted-average remaining lease term - operating leases (years)		8.4			7.6
Weighted-average discount rate - operating leases		4.6		%	5.0		%
Operating and financing cash flows from financing leases included in lease liabilities	Operating and financing cash flows from financing leases included in lease liabilities	18			—				Operating and financing cash flows from financing leases included in lease liabilities	37		—		74		—
Lease liabilities obtained from new ROU assets - financing	Lease liabilities obtained from new ROU assets - financing	0			—				Lease liabilities obtained from new ROU assets - financing	348		—		362		—
Weighted-average remaining lease term - financing leases (years)		4.3			—
Weighted-average discount rate - financing leases		4.3		%	—		%


	November 30, 2021		February 28, 2021
Weighted-average remaining lease term - operating leases (years)	7.88		6.92
Weighted-average discount rate - operating leases	4.46	%	4.71	%
Weighted-average remaining lease term - financing leases (years)	4.54		4.25
Weighted-average discount rate - financing leases	4.46	%	4.00	%

The following table outlines the classification of lease expense in the statements of income ~~(dollars in~~(in thousands):

Three Months Ended May 31,
2021 2020
Cost of sales $ 2,546 $ 3,225
Selling, general and administrative 1,130 1,249
Total lease expense $ 3,676 $ 4,474


	Three Months Ended November 30,				Nine Months Ended November 30,
	2021		2020		2021		2020
Cost of sales	$	2,808	$	2,438	$	8,205	$	8,222
Selling, general and administrative	910		1,107		3,031		3,491
Total lease expense	$	3,718	$	3,545	$	11,236	$	11,713

1314

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As of ~~May 31,~~November 30, 2021, maturities of the Company's lease liabilities were as follows ~~(dollars in~~(in thousands):


Fiscal year:	Fiscal year:	Operating Leases		Finance Leases		Total		Fiscal year:	Operating Leases		Finance Leases		Total
2022 (remaining 9 months)		$	6,896	$	53	$	6,949
2022 (remaining 3 months)								2022 (remaining 3 months)	$	2,301	$	37	$	2,338
2023	2023	8,709		71		8,780		2023	8,856		147		9,003
2024	2024	7,818		71		7,889		2024	7,973		147		8,120
2025	2025	6,777		68		6,845		2025	6,901		145		7,046
2026	2026	5,330		14		5,344		2026	5,358		76		5,434
Thereafter	Thereafter	21,962		0		21,962		Thereafter	21,391		72		21,463
Total lease payments	Total lease payments	57,492		277		57,769		Total lease payments	52,780		624		53,404
Less imputed interest	Less imputed interest	(9,872)		(21)		(9,893)		Less imputed interest	(8,691)		(41)		(8,732)
Total	Total	$	47,620	$	256	$	47,876	Total	$	44,089	$	583	$	44,672

8.Income Taxes

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws. With respect to the CARES Act, the Company benefited from the deferral of certain payroll taxes through the end of calendar year 2020 and the technical correction with respect to qualified improvement property.

The provision for income taxes reflects an effective tax rate of ~~25.5%~~22.0% for the three months ended ~~May 31,~~November 30, 2021, as compared to ~~45.8%~~25.1% for the respective prior year comparable period. The decrease in the effective tax rate was primarily attributable to ~~the~~ unfavorable ~~impact of COVID-19 on book earnings~~adjustments recorded in the prior year ~~quarter compared~~comparable period, related to an IRS audit settlement for research and development tax credits, that are not recurring in the current ~~quarter~~year.

For the nine months ended ~~May 31, 2021. The Company recorded discrete items in the first quarter of the prior year and the current year; however, since book income was significantly lower in the prior year,~~November 30, 2021, the effective tax rate was ~~impacted~~22.9%, compared to 32.3% for the prior year comparable period. The current year decrease in the effective tax rate of 940 basis points is the result of the prior year impact of restructuring and impairment charges and an IRS settlement for research and development tax credits for multiple years, which more ~~significantly by the discrete items.~~than offset current year recognition of uncertain tax positions.

9. Equity

On November 10, 2020, the Company's Board of Directors authorized a $100 million share repurchase program pursuant to which the Company may repurchase its Common Stock (the “2020 Share Authorization”). Repurchases under the 2020 Share Authorization will be made through open market and/or private transactions, in accordance with applicable federal securities laws, and could include repurchases pursuant to Rule 10b5-1 trading plans, which allows stock repurchases when the Company might otherwise be precluded from doing so.

~~During~~The following table outlines the Company's share repurchases under the 2011 Authorization and the 2020 Authorization for the three and nine months ended ~~May 31,~~November 30, 2021 ~~the Company repurchased 125,770 of its common shares~~(dollars in ~~the amount of $6.3 million at an average purchase price of $49.80 under the 2020 Share Authorization.~~thousands, except per share data):


	Three Months Ended November 30, 2021		Nine Months Ended November 30, 2021
Number of shares repurchased	148,021		564,300
Total amount of shares repurchased	$	7,636	$	28,869
Average price per share	$	51.59	$	51.16

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10. Assets Held for Sale

The Company has been executing aon its plan to divest certain non-core businesses. The strategic decision to divest of these businesses reflects the Company's long-term strategy to become a ~~more focused~~predominantly metal coatings focused company. The historical annual sales, operating profit and net assets of these businesses were not significant enough to qualify as discontinued operations.

As of November 30, 2021, one business in our Infrastructure Solutions segment and one non-operating location in our Metal Coatings segment continue to be classified as held for sale. The assets and liabilities of the businesses expected to be disposed of within the next twelve months are included in "Assets held for sale" in the accompanying consolidated balance sheets.

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Assets and liabilities allocated to the disposal group are as ~~follows:~~follows (in thousands):


				As of ~~May 31,~~November 30, 2021
Assets
Accounts receivable		$	~~4,715~~3,399
Inventories			~~2,600~~2,057
Contract assets			~~2,204~~3,373
Other current assets			~~186~~55
Property, plant and equipment			~~1,348~~1,233
Other assets			4387
Goodwill				1,693

Liabilities
Accounts payable			~~856~~ (608)
Contract liabilities			~~1,926~~ (913)
Other accrued liabilities			~~877~~ (2,451)

~~Lease liability –~~Other long term liabilities			12 (26)
Total carrying value			~~9,118~~7,899
Less: Impairment of carrying value of remaining assets held for sale to estimated sales price	(1)			(3,490)
Fair value of disposal group	$	4,409
(1) Impairment charges of $3,490 were recognized for the three months ended August 31, 2020.

11. Restructuring and Impairment Charges

During the nine months ended November 30, 2021, the Company did not recognize any restructuring and impairment charges. In the second quarter of fiscal 2021, the Company developed and began the implementation of a plan to divest certain non-core businesses and later, divested several non-core businesses.During the first and second quarter of fiscal 2021, the Company recognized $1.6 million for impairment charges and a loss on the sale of the Galvabar business, which was included in the Metal Coatings segment. During the third quarter of fiscal 2021, the Company completed the sale of AZZ SMS LLC ("SMS"), which was included in the Infrastructure Solutions segment. The Company recognized impairment charges of $0.9 million for SMS during the second quarter of fiscal 2021, and an additional loss of $1.9 million during the third quarter of fiscal 2021. The loss on the sale of these businesses are included in "Restructuring and impairment charges" in the consolidated statements of operations.

The restructuring and impairment charges for the nine months ended November 30, 2020 are summarized in the table below (in thousands):


	Nine Months Ended November 30, 2020
		Metal Coatings		Infra- structure Solutions		Total
Write down on assets held for sale to estimated sales price		$	2,930	$	4,100	$	7,030
Write down of assets expected to be abandoned		6,922		—		6,922
(Gain)/loss on sale of subsidiaries		1,191		1,859		3,050
Write down of excess inventory		—		2,511		2,511
Costs associated with assets held for sale		—		756		756
Total charges		$	11,043	$	9,226	$	20,269

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Infrastructure Solutions Segment

During the nine months ended November 30, 2020, as a result of the continued market pressures in the oil and gas services market, the Company undertook an evaluation of inventory within the tubular products business.As a result of the evaluation, the Company determined certain inventories to be in excess of their net realizable value, and recorded an inventory adjustment of $2.5 million to reduce the inventory to its net realizable value.

Metal Coatings Segment

During the nine months ended November 30, 2020, the Company approved a plan to close certain locations within the Metal Coatings segment. Management performed an analysis of the assets at each location expected to be closed.For assets that were not transferred to another location for use in operations, management recognized a charge to reflect a decrease in the estimated useful life and lower value to the Company.

The following table summarizes the charges recognized during the nine months ended November 30, 2020 related to locations that have been closed (in thousands):


	Nine Months Ended November 30, 2020

Inventory write down	$	~~5,628~~336
Property & equipment write downs	2,956
Intangible impairment	3,258
Other	372
Total	$	6,922

~~11.~~12. Commitments and Contingencies

Legal

The Company and its subsidiaries are named defendants and plaintiffs in various routine lawsuits incidental to ~~our~~its business. These proceedings include labor and employment claims, ~~use of the Company’s intellectual property,~~ worker’s compensation, environmental matters, and various commercial disputes, all ~~arising~~of which arise in the normal course of conducting business. As discovery progresses on all outstanding legal matters, the Company will continue to evaluate opportunities to either settle the disputes for nuisance value or potentially enter into mediation as a way to resolve the disputes prior to trial. As the pending cases progress through additional discovery, including expert testimony and ~~potential~~ mediation, our assessment of the likelihood of an unfavorable outcome on one or more of the pending lawsuits may change. ~~Although the~~The outcome of these lawsuits or other proceedings cannot be predicted with certainty, and the amount of any potential liability that could arise with respect to such lawsuits or other matters cannot be predicted at this ~~time, management,~~time. Management, after consultation with legal counsel, believes it has strong defenses to all of these matters and does not expect liabilities, if any, from these claims or proceedings, either individually or in the aggregate, to have a material effect on the Company’s financial position, results of operations or cash flows.

~~12.~~13. Subsequent Event

On ~~July 8,~~December 31, 2021, the Company ~~refinanced its current un-secured revolving credit facility, which was scheduled~~entered into an agreement to ~~mature~~acquire all the assets of Steel Creek Galvanizing Company, LLC (“Steel Creek”), a privately held hot-dip galvanizing company based in ~~March 2022, with a new five-year un-secured revolving credit facility under that certain credit agreement, dated July 8, 2021 by and among~~Blacksburg, South Carolina. The business will be included in the ~~Company, borrower, Citibank, N.A., as administrative agent and the other agents and lender parties thereto (the “2021 Credit Agreement”).~~Company's Metal Coatings segment. The ~~2021 Credit Agreement matures in July 2026 and includes the following significant terms;~~

i.~~provides for a senior un-secured revolving credit facility with a principal amount~~acquisition expanded our network of ~~up to $400.0 million revolving loan commitments, and includes an additional $200.0 million uncommitted incremental accordion facility,~~

~~ii.~~interest rate margin ranges from 87.5 bps to 175 bps for Eurodollar Rate loans, and from 0.0 bps to 75 bps for Base Rate loans, depending on leverage ratio of the Company and its consolidated subsidiaries as a group,

~~iii.includes a letter of credit sub-facility up to $85.0 million for the issuance of standby and commercial letters of credit,~~galvanizing plants.

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~~iv.includes a $50.0 million sublimit for swing line loans,~~

v.includes customary representations and warranties, affirmative covenants and negative covenants, and events of default, including restrictions on incurrence of non-ordinary course debt, investment and dividends, subject to various exceptions, carve-outs and baskets, and

~~vi.includes a maximum leverage ratio financial covenant and an interest coverage ratio financial covenant, each to be tested at quarter end.~~

~~The proceeds of the loans under the 2021 Credit Agreement will be used primarily to finance working capital needs, capital improvements, dividends, future acquisitions and general corporate purposes.~~

The foregoing summary of certain terms and provisions of the 2021 Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the 2021 Credit Agreement, a copy of which is attached hereto as Exhibit 10.3 to this Form 10-Q and is incorporated herein by reference.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

Certain statements herein about our expectations of future events or results constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," ~~'anticipates,~~"anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. Such forward-looking statements are based on currently available competitive, financial and economic data and management’s views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements. In addition, certain factors could affect the outcome of the matters described herein. This Quarterly Report may contain forward-looking statements that involve risks and uncertainties including, but not limited to, changes in customer demand for our products and services, including demand by the ~~metal coatings market,~~ power generation markets, electrical transmission and distribution markets, the industrial markets and the ~~industrial~~metal coatings markets. In addition, within each of the markets we serve, our customers and our operations could potentially continue to be adversely impacted by the ongoing coronavirus ("COVID-19") ~~pandemic.~~pandemic, including governmental issued mandates regarding the same. We could also experience ~~fluctuations~~additional increases in ~~prices~~labor costs, components and raw ~~material cost,~~materials, including zinc and natural gas, which are used in ~~the~~our hot dip galvanizing process; supply-chain vendor delays; customer requested delays of our products or services; delays in additional acquisition or disposition opportunities; currency exchange rates; adequacy of financing; availability of experienced management and employees to implement AZZ’s growth strategy; a downturn in market conditions in any industry relating to the products we inventory or sell or the services that we provide; economic volatility or changes in the political stability in the United States and other foreign markets in which we operate; acts of war or terrorism inside the United States or abroad; and other changes in economic and financial conditions. AZZ has provided additional information regarding risks associated with the business in AZZ's Annual Report on Form 10-K for the fiscal year ended February 28, 2021 and other filings with the SEC, available for viewing on AZZ's website at www.azz.com and on the SEC's website at www.sec.gov.

You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. These statements are based on information as of the date hereof and AZZ assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

The following discussion should be read in conjunction with management’s discussion and analysis contained in our Annual Report on Form 10-K for the fiscal year ended February 28, 2021, and with the condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.

~~Results of Operations~~

RESULTS OF OPERATIONS

Strategy

We have a developed strategy and periodically review our strategy against our performance, market conditions and competitive threats. During the third quarter of fiscal 2021, we publicly announced strategic and financial initiatives to enhance shareholder value. These initiatives ~~include~~included a comprehensive, Board-led review of our portfolio and capital allocation and the engagement of leading independent financial, legal and tax advisors in support of this review. We have ~~continued~~completed much of the review and continue to aggressively pursue these initiatives in fiscal 2022. ~~These~~We believe these actions will allow us to accelerate the strategy to become a ~~more focused~~predominantly metal coatings focused company, which we believe will more rapidly enhance shareholder value.

Coronavirus (COVID-19)

The continued uncertainty associated with COVID-19, and any of the ongoing variants, did not have a material adverse effect on our results of operations for the three months ended ~~May 31,~~November 30, 2021. While we continue to support our customers, there remains uncertainties regarding the duration and, to what extent, if any, that the COVID-19 pandemic, or newly identified variants, or additional regulatory requirements, will ultimately have on the demand for our products and services or with our supply ~~chain. We continue to monitor the situation as information becomes readily available and continue to take actions to provide for the safety of~~chain or our ~~personnel, and to support the requirements under the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency ("CISA").~~employees.

Our operations remain open globally and the impact to our personnel and operations has been limited by the effects of COVID-19. The most significant impact to us has been our ability to serve customers at their business locations.~~We have experienced limited customer order deferrals, but there have been few outright customer order cancellations. During the first~~

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The impact of COVID-19 to the Company's personnel and operations has been limited. During the third quarter of fiscal 2022, wethe Company continued to see improvement in sales and operating income in both of ~~our~~its operating segments. ~~While governments~~However, labor market and supply chain challenges have ~~taken actions, including~~increased during the ~~approval~~current quarter, resulting in increased operating expenses as the constrained labor market and supply chain disruptions impacted the availability and cost of ~~vaccines to limit~~labor and materials. In addition, new vaccine mandates were announced on September 9, 2021. Since the ~~impacts~~most current pronouncements indicate the mandates must be implemented by January 10, 2022, the extent of ~~COVID-19, we~~the regulatory impact is unclear at this time and could potentially have an adverse impact on our future operations. We cannot reasonably estimate the ~~length or~~ severity of this pandemic or the government's mandates regarding the same, or the extent to which the disruption may materially impact our consolidated balance ~~sheet,~~sheets, statements of income or statements of cash flows for fiscal year ~~2022.~~

In March 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which among other things, provides employer payroll tax credits for wages paid to employees who are unable to work during the COVID-19 pandemic and options to defer payroll tax payments. Based on an evaluation of the CARES Act, we qualified for the deferral of payroll and other tax payments.2022 or beyond.

Overview

We have two distinct operating segments, the Metal Coatings segment and the Infrastructure Solutions segment. Management believes that the most meaningful analysis of our results of operations is to analyze our performance by segment. We use sales and operating income by segment to evaluate the performance of our segments. Segment operating income consists of sales less cost of sales and selling, general and administrative expenses that are specifically identifiable to a segment. For a reconciliation of segment operating income to consolidated operating income, see Note 4 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

During the ~~three~~nine months ended ~~May 31,~~November 30, 2021, we ~~continue~~have continued to execute aour plan to divest certain non-core businesses, which was approved by the board of directors in fiscal 2021. As of ~~May 31,~~November 30, 2021, one business in our Infrastructure Solutions segment ~~is classified as held for sale. In addition,~~and one non-operating location in our Metal Coatings segment isremain classified as held for sale. The assets and liabilities of these locations are expected to be disposed of within the next twelve months, and are included in "Assets held for sale" in the accompanying consolidated balance ~~sheet.~~sheets.

Orders and Backlog

Our backlog relates entirely to our Infrastructure Solutions segment and excludes transaction taxes for certain foreign subsidiaries. As of ~~May 31,~~November 30, 2021, backlog ~~remained flat to~~increased $31.6 million from February 28, 2021, ~~at $186.1~~to $217.7 million. Our backlog ~~decreased $19.3~~increased $43.3 million, or ~~9.4%~~24.8%, as compared to ~~$205.4~~$174.4 million for the same period in the prior fiscal year. The ~~decrease~~increase in backlog is primarily due to an increase in backlog in the Electrical platform, partially offset by the continued ~~impact~~reduction of ~~COVID-19, which resulted in a decrease in bookings and sales over the past 12 months,~~international backlog, including China, related to several non-recurring contracts, and, to a lesser extent, divestitures that occurred in fiscal year 2021. For the three months ended ~~May 31,~~November 30, 2021, ~~backlog was favorably impacted by an increase in our incoming~~ net bookings ~~of $54.9~~increased $53.6 million, or ~~31.4%~~27.6%, to $248.0 million, compared to same period of fiscal 2021, ~~due to~~as a ~~decrease~~result of strong bookings in ~~some COVID-19 related restrictions during~~our Electrical platform and continued strong sales in the ~~quarter.~~Metal Coatings segment. The ~~decrease in restrictions also favorably impacted our~~ book-to-sales ratio ~~which~~ increased to ~~1.00,~~1.07, from 0.82. The decrease in backlog was also due to an increase in sales recognized in the current quarter compared to the prior quarter, primarily related to sales recognized in the current quarter for certain large international projects for which bookings were recorded in prior years.0.86.

The table below includes the progression of backlog ~~(dollars in~~(in thousands):


		Period Ended			Period Ended				Period Ended			Period Ended
Backlog	Backlog	2/28/2021	$	186,119	2/28/2020	$	243,799	Backlog	2/28/2021	$	186,119	2/29/2020	$	243,799
Net bookings	Net bookings		229,805			174,865		Net bookings		229,805			174,865

Acquired backlog								Acquired backlog		—			—
Sales recognized	Sales recognized		(229,826)			(213,293)		Sales recognized		(229,826)			(213,293)
Backlog	Backlog	5/31/2021	$	186,098	5/31/2020	$	205,371	Backlog	5/31/2021	186,098		5/31/2020	205,371
Book to sales ratio	Book to sales ratio		1.00			0.82		Book to sales ratio		1.00			0.82
Net bookings								Net bookings		231,821			208,627
Sales recognized								Sales recognized		(216,447)			(203,372)
Backlog								Backlog	8/31/2021	$	201,472	8/31/2020	$	210,626
Book to sales ratio								Book to sales ratio		1.07			1.03
Net bookings								Net bookings		247,984			194,376
Backlog adjusted due to divestiture								Backlog adjusted due to divestiture		—			(4,026)
Sales recognized								Sales recognized		(231,737)			(226,623)
Backlog								Backlog	11/30/2021	217,719		11/30/2020	174,353
Book to Sales ratio								Book to Sales ratio		1.07			0.86

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QUARTER ENDED NOVEMBER 31, 2021 COMPARED TO THE QUARTER ENDED NOVEMBER 31, 2020

Segment Sales

The following table reflects the breakdown of sales by segment ~~(dollars in~~(in thousands):


		Three Months Ended May 31,				Three Months Ended November 30,
		2021		2020				2021		2020
Sales:	Sales:						Sales:
Metal Coatings	Metal Coatings	$	127,735	$	118,991		Metal Coatings	$	133,373	$	115,616
Infrastructure Solutions	Infrastructure Solutions	102,091		94,302			Infrastructure Solutions	98,364		111,007
Total sales		$	229,826	$	213,293
Total Sales							Total Sales	$	231,737	$	226,623

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For the three months ended ~~May 31,~~November 30, 2021 (the "current quarter"), consolidated sales increased ~~$16.5~~$5.1 million, or ~~7.8%~~2.3%, as compared to the ~~same period in fiscal 2021.~~three months ended November 30, 2020 (the "prior year quarter"). Sales for the Metal Coatings segment increased ~~$8.7~~$17.8 million, or ~~7.3%~~15.4%, for the ~~three months ended May 31, 2021, as~~current quarter, compared to the ~~same period in fiscal 2021.~~prior year quarter. The increase was primarily due to improved price realization for our superior quality and service and the acquisition of a metal coatings ~~facility in~~business during the fourth quarter of fiscal ~~2021 and~~2021.

Sales for the ~~improved performance of our surface technology offerings. The volume of steel processed remained steady in~~Infrastructure Solutions segment decreased $12.6 million, or 11.4%, for the current quarter, compared to the prior year quarter. Sales for the Infrastructure Solutions segment increased $7.8 million, or 8.3%, for the three months ended May 31, 2021 as compared to the same period in fiscal 2020. The increase was primarily related to an improvement in the spring turnaround season inIn the Industrial platform, ~~(as~~ the ~~prior year~~decrease was ~~significantly impacted by COVID-19), partially offset by a decrease related~~primarily due to anet sales decreases in our international operations and the divestiture inof SMS during the third quarter of fiscal ~~2021.~~2021, partially offset by an increase in domestic sales. In the Electrical platform, sales decreased ~~compared~~due to a delay in material receipts resulting from supply chain disruptions and the ~~prior year, primarily due to~~constrained labor market at several of our enclosure and switchgear plants in our domestic operations, and lower sales in China as several projects near ~~completion,~~completion. These decreases were partially offset by an increase in ~~backlog and sales for switchgear and enclosure products in~~ our domestic ~~operations.~~bus duct sales.

Segment Operating Income

The following table reflects the breakdown of operating income by segment ~~(dollars in~~(in thousands):


		Three Months Ended May 31, 2021								Three Months Ended May 31, 2020									Three Months Ended November 30, 2021								Three Months Ended November 30, 2020
		Metal Coatings		Infra- structure Solutions		Corporate		Total		Metal Coatings		Infra- structure Solutions		Corporate		Total			Metal Coatings		Infra- structure Solutions		Corporate		Total		Metal Coatings		Infra- structure Solutions		Corporate		Total
Operating income (loss):	Operating income (loss):																	Operating income (loss):
Sales	Sales	$	127,735	$	102,091	$	—	$	229,826	$	118,991	$	94,302	$	—	$	213,293	Sales	$	133,373	$	98,364	$	—	$	231,737	$	115,616	$	111,007	$	—	$	226,623
Cost of sales	Cost of sales	92,078		79,821		—		171,899		89,339		81,746		—		171,085		Cost of sales	96,361		78,412		—		174,773		83,553		88,395		—		171,948
Gross margin	Gross margin	35,657		22,270		—		57,927		29,652		12,556		—		42,208		Gross margin	37,012		19,952		—		56,964		32,063		22,612		—		54,675
Selling, general and administrative	Selling, general and administrative	4,081		12,646		10,488		27,215		4,567		13,604		9,719		27,890		Selling, general and administrative	4,288		10,763		11,821		26,872		3,673		12,033		9,522		25,228

Total operating income		$	31,576	$	9,624	$	(10,488)	$	30,712	$	25,085	$	(1,048)	$	(9,719)	$	14,318
Restructuring and impairment charges																		Restructuring and impairment charges	—		—		—		—		(281)		1,857		—		1,576
Total operating income (loss)																		Total operating income (loss)	$	32,724	$	9,189	$	(11,821)	$	30,092	$	28,671	$	8,722	$	(9,522)	$	27,871

Operating income for the Metal Coatings segment increased ~~$6.5~~$4.1 million, or ~~25.9%~~14.1%, for the ~~three months ended May 31, 2021, as~~current quarter, compared to the ~~same period in fiscal 2021.~~prior year quarter. The current quarter increase was ~~primarily~~ due to ~~the increase in~~improved sales as described above ~~a decrease in the cost of zinc in the kettles~~ and the achievement of operational efficiencies in our ~~surface technologies~~Surface Technologies platform.

Operating income for the Infrastructure Solutions segment increased by ~~$10.7~~$0.5 million, or ~~1,018.3%~~5.4%, for the ~~three months ended May 31, 2021 as~~current quarter, compared to the ~~same period~~prior year quarter. Industrial platform sales increased for our domestic operations, and the segment benefited from the divestiture of SMS during the third quarter of fiscal year 2021, which incurred losses in ~~fiscal 2021.~~the prior year. These increases were partially offset by a decrease in operating income in our international operations. In the Electrical platform, operating income decreased for our enclosures and switchgear products due to increased costs for labor and materials as a result of the

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constrained labor market and supply chain disruptions. The ~~increase~~decrease was ~~primarily related to the~~partially offset by an increase in ~~sales as noted above~~operating income for our lighting and ~~cost controls implemented in fiscal 2021 across the platform to mitigate disrupted markets.~~tubing products.

Corporate expenses increased ~~$0.8~~$2.3 million, or ~~7.9%~~24.1%, for the ~~three months ended May 31, 2021, as~~current quarter, compared to the ~~same period in fiscal 2021.~~prior year quarter. The increase is primarily due to increases ~~in administrative~~related to payroll and compensation costs, as well as external consulting costs associated with ~~the previously announced~~our ongoing strategic review.

Restructuring and Impairment Charges

During the current quarter, we continued to execute a plan to divest certain non-core businesses. During the first nine months ended November 30, 2020, we closed on the sale of two businesses, and the board of directors approved a plan to divest certain other businesses within the Company. As of November 30, 2021, one additional business in our Infrastructure Solutions segment and one non-operating location in our Metal Coatings segment continue to be classified as held for sale. The assets and liabilities of the businesses expected to be disposed of within the next twelve months are included in "Assets held for sale" in the accompanying consolidated balance sheets.

During the current quarter, no restructuring and impairment charges were recorded. During the prior year quarter, we recorded certain charges related to these restructuring activities, which are summarized in the table below:


	Three Months Ended November 30, 2020
	Metal Coatings		Infra- structure Solutions		Total
Write down on assets held for sale to estimated sales price	$	(231)	$	—	$	(231)
Write down of assets expected to be abandoned	(43)		—		(43)
(Gain)/loss on sale of subsidiaries	(7)		1,859		1,852

Costs associated with assets held for sale	—		(2)		(2)
Total charges	$	(281)	$	1,857	$	1,576

Other (income) expense, net

Other ~~income~~expense was ~~$1.0~~$1.4 million for the ~~three months ended May 31, 2021, as~~current quarter, compared to other ~~expense~~income of ~~$1.4~~$0.7 million for the ~~same period in fiscal 2020.~~prior year quarter. The increase was primarily due to ~~favorable~~unfavorable foreign exchange transaction adjustments in the current year.

Interest Expense

Interest expense for the ~~three months ended May 31, 2021~~current quarter decreased ~~$0.9~~$0.6 million, or ~~35.6%~~28.3%, to ~~$1.7~~$1.6 million, as compared to ~~$2.6~~$2.3 million for the ~~respective~~ prior ~~period.~~year quarter. The decrease in interest expense was primarily attributable to the Company's 2020 Senior Notes, which were funded in late fiscal ~~2021, and~~2021. While the borrowings under the 2020 Senior Notes increased $25.0 million to $150.0 million, they carry lower interest rates than the Company's previous senior notes.

Income Taxes

The provision for income taxes reflects an effective tax rate of ~~25.5%~~22.0% for the ~~three months ended May 31, 2021, as~~current quarter, compared to ~~45.8%~~25.1% for the respective prior year ~~comparable period.~~quarter. The decrease in the effective tax rate was primarily attributable to ~~the~~ unfavorable ~~impact of COVID-19 on book earnings~~adjustments recorded in the prior year quarter, related to an IRS audit settlement for research and development tax credits.

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NINE MONTHS ENDED NOVEMBER 31, 2021 COMPARED TO THE NINE MONTHS ENDED NOVEMBER 31, 2020

Segment Sales

The following table reflects the breakdown of sales by segment (in thousands):


	Nine Months Ended November 30,
	2021		2020
Sales:
Metal Coatings	$	390,701	$	351,643
Infrastructure Solutions	287,309		291,644
Total Sales	$	678,010	$	643,287

For the nine months ended November 30, 2021 (the "current nine-month period"), consolidated sales increased $34.7 million, or 5.4%, compared to the nine months ended November 30, 2020 (the "prior year nine-month period"). Sales for the Metal Coatings segment increased $39.1 million, or 11.1%, for the current ~~quarter ended May 31, 2021. The Company recorded discrete items in the first quarter of~~nine-month period, compared to the prior year nine-month period. The increase in sales was primarily due to improved price realization for our superior quality and service and the acquisition of a metal coatings facility during the fourth quarter of fiscal 2021. The volume of steel processed also increased in the current ~~year; however, since book income~~period, compared to the prior year period.

Sales for the Infrastructure Solutions segment decreased $4.3 million, or 1.5%, for the current nine-month period, compared to the prior year nine-month period. Sales decreased in the Industrial platform, primarily due to the divestiture of SMS in the third quarter of fiscal year 2021, partially offset by sales increases in both domestic and international operations (as the prior year was significantly impacted by COVID-19). In the Electrical platform, sales decreased due to a delay in material receipts due to supply chain disruptions and the constrained labor market at several of our enclosure and switchgear plants in our domestic operations, and lower sales in China as several projects near completion. The decrease in our enclosure and switchgear plants was partially offset by an increase in our domestic bus duct sales.

Segment Operating Income

The following table reflects the breakdown of operating income by segment (in thousands):


	Nine Months Ended November 30, 2021								Nine Months Ended November 30, 2020
	Metal Coatings		Infra- structure Solutions		Corporate		Total		Metal Coatings		Infra- structure Solutions		Corporate		Total
Operating income (loss):
Sales	$	390,701	$	287,309	$	—	$	678,010	$	351,643	$	291,644	$	—	$	643,287
Cost of sales	282,198		225,806		—		508,004		258,983		241,328		—		500,311
Gross margin	108,503		61,503		—		170,006		92,660		50,316		—		142,976
Selling, general and administrative	12,615		35,665		34,394		82,674		12,262		37,726		29,879		79,867
Restructuring and impairment charges	—		—		—		—		11,043		9,226		—		20,269
Total operating income (loss)	$	95,888	$	25,838	$	(34,394)	$	87,332	$	69,355	$	3,364	$	(29,879)	$	42,840

Operating income for the Metal Coatings segment increased $26.5 million, or 38.3%, for the current nine-month period, compared to the prior year nine-month period. The increase was primarily due to impairment and restructuring charges recognized in fiscal 2021 of $11.0 million, the increase in sales as described above and the achievement of operational efficiencies in our surface technologies platform.

Operating income for the Infrastructure Solutions segment increased by $22.5 million, or 668.1%, for the current nine-month period, compared to the prior year nine-month period. Gross margins improved on operating leverage within both the Industrial and Electrical platforms compared to prior year, as well as a divestiture of an under-performing business in the Industrial platform in the third quarter of fiscal year 2021. In addition, in the prior year ~~the effective tax rate~~to date period, operating income was ~~impacted more significantly by the discrete items.~~

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impacted by an impairment on assets being classified as assets held for sale and other asset impairments of $9.2 million, as discussed below.

Corporate expenses increased $4.5 million, or 15.1%, for the current nine-month period, compared to the prior year nine-month period. The increase is primarily due to increases in payroll and compensation costs, and external consulting costs associated with the ongoing strategic review.

Restructuring and Impairment Charges

During the current nine-month period, we continued to execute a plan to divest certain non-core businesses. During the prior year nine-month period, we closed on the sale of two businesses, and the board of directors approved a plan to divest certain other businesses within the Company. As of November 30, 2021, one additional business in our Infrastructure Solutions segment and one non-operating location in our Metal Coatings segment continue to be classified as held for sale. The assets and liabilities of the businesses expected to be disposed of within the next twelve months are included in "Assets held for sale" in the accompanying consolidated balance sheets.

During the current nine-month period, no restructuring and impairment charges were recorded. During the compared to the prior year nine-month period, we recorded certain charges related to these restructuring activities, which are summarized in the table below:


	Nine Months Ended November 30, 2020
	Metal Coatings		Infra- structure Solutions		Total
Write down on assets held for sale to estimated sales price	$	2,930	$	4,100	$	7,030
Write down of assets expected to be abandoned	6,922		—		6,922
Loss on sale of subsidiaries	1,191		1,859		3,050
Write down of excess inventory	—		2,511		2,511
Costs associated with assets held for sale	—		756		756
Total charges	$	11,043	$	9,226	$	20,269

Other (income) expense, net

Other expense was $1.4 million for the current nine-month period, compared to $0.8 million for the prior year nine-month period. The increase was primarily due to unfavorable foreign exchange transaction adjustments for foreign costs and intercompany loans in the current year.

Interest Expense

Interest expense for the for the current nine-month period decreased $2.3 million, or 31.1%, to $5.1 million, compared to $7.4 million for the prior year nine-month period. The decrease was primarily attributable to the Company's 2020 Senior Notes, which were funded in late fiscal 2021. While the borrowings under the 2020 Senior Notes increased $25.0 million to $150.0 million, they carry lower interest rates than the Company's previous senior notes.

Income Taxes

The provision for income taxes reflects an effective tax rate of 22.9% for the current nine-month period, compared to 32.3% for the prior year nine-month period. The current year decrease in the effective tax rate of 940 basis points is the result of the prior year impact of restructuring and impairment charges and an IRS settlement for research and development tax credits for multiple years, which more than offset current year recognition of uncertain tax positions.

~~Liquidity and Capital Resources~~

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LIQUIDITY AND CAPITAL RESOURCES

We have historically met our cash needs through a combination of cash flows from operating activities along with bank and bond market debt. Our cash requirements generally include cash dividend payments, capital improvements, debt repayment, acquisitions, and share repurchases. We believe that our cash position, cash flows from operating activities and our expectation of continuing availability to draw upon our credit facilities are sufficient to meet our cash flow needs for the foreseeable future.

Cash Flows

The following table summarizes our cash flows by category and working capital for the periods presented ~~(dollars in~~(in thousands):

Three Months Ended May 31,
2021 2020
Net cash provided by (used in) operating activities $ 11,060 $ (11,184)
Net cash used in investing activities (7,466) (10,847)
Net cash (used in) provided by financing activities (5,610) 11,036


	Nine Months Ended November 30,
	2021		2020
Net cash provided by operating activities	$	49,668	$	59,394
Net cash used in investing activities	(16,425)		(14,987)
Net cash used in financing activities	(29,167)		(64,229)
Working Capital	230,878		189,642

Net cash provided by operating activities for the ~~three months ended May 31, 2021~~current nine-month period was ~~$11.1~~$49.7 million, compared to ~~net cash used in operating activities of $11.2~~$59.4 million for the prior year ~~quarter.~~nine-month period. The ~~increase~~decrease in cash provided by operating activities ~~for the current quarter~~ is primarily attributable to increased net ~~income.~~income, which was impacted by $20.3 million of impairment and restructuring charges in the prior year nine-month period, and increases in working capital from contract assets and liabilities, accounts payable and accrued expenses. These increases were more than offset by decreases in working capital from accounts receivable, inventories and prepaid assets.

Net cash used in investing activities for the ~~three months ended May 31, 2021~~current nine-month period was ~~$7.5~~$16.4 million, compared to ~~$10.8~~$15.0 million for the prior year ~~quarter.~~nine-month period. The ~~decrease~~increase in cash used for investing activities for the current quarter was primarily attributable decreased proceeds from the sale of subsidiaries, due to the sale of our Galvabar business in the prior year, partially offset by decreased capital ~~expenditures.~~expenditures in the current year.

Net cash used in financing activities for the ~~three months ended May 31, 2021~~current nine-month period was ~~$5.6~~$29.2 million, compared to ~~$11.0~~$64.2 million ~~of cash provided by investing activities~~ for the prior year ~~quarter.~~nine-month period. The ~~increase~~decrease in cash used ~~for~~in financing activities during the current quarter was primarily attributable to an increase in net ~~payments~~draws on ~~the revolver,~~our credit facility and a decrease in repurchases of shares of Company common stock. See “Share Repurchases” sections below for additional information.

~~Our working capital was $203.7 million as of May 31, 2021, as compared to $189.6 million as of February 28, 2021.~~

Financing and Capital

On October 9, 2020, we completed a private placement transaction and entered into a Note Purchase Agreement, whereby we agreed to borrow $150.0 million of senior unsecured notes (the “2020 SeniorNotes”), consisting of two separate tranches:

•~~7-year borrowing: $70.0 million priced at 2.77% coupon, and~~

•~~12-year borrowing: $80.0 million priced at 3.17% coupon.~~

The proceeds of the $80.0 million tranche was funded on December 17, 2020. The $70.0 million tranche was funded in January 2021. The proceeds were used to repay the existing $125.0 million 5.42% Senior Notes maturing on January 20, 2021, as well as for general corporate purposes. Interest on the outstanding 2020 Senior Notes is paid semi-annually, in January and July.

As of May 31, 2021, we had $186.0 million of floating- and fixed-rate notes outstanding with varying maturities through fiscal 2032 and we were in compliance with all of the covenants related to these outstanding borrowings. As of May 31, 2021, we had approximately $404.0 million of additional credit available for future draws or letters of credit.

On July 8, 2021, the Company refinanced its current ~~un-secured~~unsecured revolving credit facility, which was scheduled to mature in March 2022, with a new five-year ~~un-secured~~senior unsecured revolving credit facility ~~under that certain credit agreement,~~ dated July 8, 2021 by and among the Company, borrower, Citibank, N.A., as administrative agent and the other agents and lender parties thereto (the “2021 Credit Agreement”). The 2021 Credit Agreement matures in July 2026 and includes the following significant ~~terms;~~terms:

~~Table of~~ ~~Contents~~

i.provides for a senior ~~un-secured~~unsecured revolving credit facility with a principal amount of up to $400.0 million revolving loan commitments, and includes an additional $200.0 million uncommitted incremental accordion ~~facility,~~facility;

ii.interest rate margin ranges from 87.5 bps to 175 bps for Eurodollar Rate loans, and from 0.0 bps to 75 bps for Base Rate loans (as defined in the 2021 Credit Agreement), depending on leverage ratio of the Company and its consolidated subsidiaries as a ~~group,~~group;

iii.includes a letter of credit sub-facility up to $85.0 million for the issuance of standby and commercial letters of credit,

iv.includes a $50.0 million sublimit for swing line ~~loans,~~loans;

vi.includes a maximum leverage ratio financial covenant and an interest coverage ratio financial covenant, each to be tested at each quarter end.

The proceeds of the ~~loans~~advances under the 2021 Credit Agreement ~~will~~are to be ~~used~~utilized primarily to finance working capital needs, capital improvements, dividends, ~~future~~ acquisitions and for general corporate purposes.

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The foregoing summary of ~~certain~~material terms and provisions of the 2021 Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the 2021 Credit Agreement, a copy of which is attached hereto as Exhibit 10.3 to this Form 10-Q and is incorporated herein by reference.

As of November 30, 2021, we had $192.0 million of total debt outstanding with varying maturities through fiscal 2032 and we were in compliance with all of the covenants related to these outstanding borrowings. As of November 30, 2021, we had approximately $348.2 million of additional credit available for future draws or letters of credit.

Share Repurchase Program

During the ~~three months ended May 31, 2021,~~current nine-month period, the Company repurchased ~~125,770~~564,300 of its common shares in the amount of ~~$6.3~~$28.9 million at an average purchase price of ~~$49.80~~$51.16 under the 2020 Share Authorization. For additional information regarding our share repurchases during the current year-to-date period, see Part II, “Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.”

Other Exposures

We have exposure to commodity price increases in both ~~segments~~ of our ~~business,~~operating segments, primarily copper, aluminum, steel and ~~nickel based~~nickel-based alloys in the Infrastructure Solutions segment and zinc and natural gas in the Metal Coatings segment. We attempt to minimize these increases through escalation clauses in customer contracts for copper, aluminum, steel and ~~nickel based~~nickel-based alloys, when market conditions allow and through fixed cost contract purchases on zinc. In addition to these measures, we attempt to recover other cost increases through improvements to our manufacturing process, supply chain management, and through increases in prices where competitively feasible.

Off Balance Sheet Arrangements and Contractual Obligations

As of ~~May 31,~~November 30, 2021, we did not have any off-balance sheet arrangements as defined under SEC rules. Specifically, there were no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on the financial condition, changes in financial condition, sales or expenses, results of operations, liquidity, capital expenditures or capital resources of the Company.

As of ~~May 31,~~November 30, 2021, we had outstanding letters of credit in the amount of ~~$25.5~~$20.6 million. These letters of credit are issued for a number of reasons, but are most commonly issued in lieu of customer retention withholding payments covering warranty or performance periods.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires us to make judgments, assumptions, and estimates that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. ~~On an ongoing basis, we~~We continuously evaluate our estimates and ~~assumptions. These estimates and~~ assumptions ~~are~~ based onupon current facts, historical experience, and various other factors that we believe are reasonable under the circumstances to determine reported amounts of assets, liabilities, sales and expenses that are not readily apparent from other sources.

During the ~~three months ended May 31, 2021,~~current nine-month period, there were no significant changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in Part II, Item 7. Management’s Discussion

~~Table of~~ ~~Contents~~

and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended February 28, 2021.

Recent Accounting Pronouncements

See Note 1 to the condensed consolidated financial statements, included herein, for a full description of recent accounting pronouncements, including the actual and expected dates of adoption and estimated effects on our consolidated results of operations and financial condition, which is incorporated herein by reference.

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Non-GAAP Disclosures

In addition to reporting financial results in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”), the Company has provided adjusted operating income, adjusted earnings and adjusted earnings per share (collectively, the “Adjusted Earnings Measures”), which are non-GAAP measures. Management believes that the presentation of these measures provides investors with a greater transparency comparison of operating results across a broad spectrum of companies, which provides a more complete understanding of the Company’s financial performance, competitive position and prospects for the future. Management also believes that investors regularly rely on non-GAAP financial measures, such as adjusted operating income, adjusted earnings and adjusted earnings per share, to assess operating performance and that such measures may highlight trends in the Company’s business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP.

In fiscal 2021, the Company developed and began the implementation of a plan to divest certain non-core businesses and later, divested several non-core businesses. During the nine months ended November 30, 2021, the Company did not recognize any restructuring and impairment charges. The following tables provides a reconciliation for the three and nine months ended November 30, 2021 and 2020 between the various measures calculated in accordance with GAAP to the Adjusted Earnings Measures (in thousands, except per share data):


	Three Months Ended November 30,				Nine Months Ended November 30,
	2021		2020		2021		2020
Operating income	30,092		$	27,871	87,332		$	42,840
Restructuring and impairment charges	—		1,576		—		20,269
Adjusted operating income	$	30,092	$	29,447	$	87,332	$	63,109


	Three Months Ended				Nine Months Ended
	November 30, 2020				November 30, 2020
	Amount		Per Diluted Share		Amount		Per Diluted Share
Net income and diluted earnings per share	$	19,703	$	0.76	$	23,454	$	0.90
Adjustments (net of tax):
Restructuring and impairment charges:
Metal Coatings	(281)		(0.01)		11,043		0.42
Infrastructure Solutions	1,857		0.07		9,226		0.35
Subtotal	1,576		0.06		20,269		0.77
Tax benefit related to restructuring and impairment charges	(347)		(0.01)		(4,459)		(0.17)
Total adjustments	1,229		0.05		15,810		0.61
Adjusted earnings and adjusted earnings per share	$	20,932	$	0.80	$	39,264	$	1.50

(1) Earnings per share amounts included in the table above may not sum due to rounding differences.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the Company’s market risk disclosures during the ~~first three~~nine months ~~of fiscal 2022.~~ended November 30, 2021. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of our Annual Report on Form 10-K for the year ended February 28, 2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer, management of the Company has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this Form 10-Q to provide reasonable assurance that information required to be disclosed by us in our reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules; and (ii) accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely discussions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting

There have been no significant changes in the Company's internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

2227

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company and its subsidiaries are named defendants and plaintiffs in various routine lawsuits incidental to ~~our~~its business. These proceedings include labor and employment claims, ~~use of the Company’s intellectual property,~~ worker’s compensation, environmental matters, and various commercial disputes, all ~~arising~~of which arise in the normal course of conducting business. ~~Although~~As discovery progresses on all outstanding legal matters, the Company will continue to evaluate opportunities to either settle the disputes for nuisance value or potentially enter into mediation as a way to resolve the disputes prior to trial. As the pending cases progress through additional discovery, including expert testimony and mediation, our assessment of the likelihood of an unfavorable outcome on one or more of the pending lawsuits may change. The outcome of these lawsuits or other proceedings cannot be predicted with certainty, and the amount of any potential liability that could arise with respect to such lawsuits or other ~~legal~~ matters cannot be predicted at this ~~time, management,~~time. Management, after consultation with legal counsel, believes it has strong defenses to all of these matters and does not expect liabilities, if any, from these claims or proceedings, either individually or in the aggregate, to have a material effect on the Company’s financial ~~condition,~~position, results of operations or cash flows.

Item 1A. Risk Factors

There are numerous factors that affect our business, financial condition, results of operations and cash flows, many of which are beyond our control. In addition to other information set forth in this Quarterly Report, careful consideration should be given to “Item 1A. Risk Factors” in Part I and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of our Annual Report, which contain descriptions of significant factors that might cause the actual results of operations in future periods to differ materially from those currently projected in the forward-looking statements contained therein.

~~There~~Except as described below, there have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussion of the Company’s risk factors under Part I, Item 1A. in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2021.

Our business and operations may be adversely affected by the evolving and ongoing COVID-19 global pandemic.

The evolving impact of the viral strain of coronavirus ("COVID-19"), which was declared a global pandemic in March 2020 by the World Health Organization, resulted in most governments issuing restrictive orders, including "shelter in place" orders around the globe in 2020 to assist in reducing the spread of the virus.

Subsequently, in March 2020, the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency ("CISA") department issued guidance clarifying that critical infrastructure industries had a responsibility to maintain operations while these restrictive measures were in place. Based on input from the government, as well as our customers, we have continued to operate our businesses under the CISA guidelines in an effort to support critical infrastructure in the areas where we were either required to do so, or where we were able.

On September 9, 2021, President Biden announced a proposed new rule requiring all employers with at least 100 employees to ensure that their employees are fully vaccinated or require unvaccinated workers to get a negative test at least once a week. The Department of Labor’s Occupational Safety and Health Administration ("OSHA") issued an Emergency Temporary Standard ("ETS") on November 5, 2021. On November 12, 2021, the 5th Circuit Court of Appeals issued an order staying enforcement and implementation of this ETS. On December 17, 2021, the 6th Circuit Court of Appeals dissolved this stay, allowing OSHA to implement the ETS. Currently, the ETS is scheduled to go into effect on January 10, 2022.

It is not currently possible to predict with any certainty the exact impact the new regulation would have on our Company.As a company with more than 100 employees, we will be required to mandate COVID-19 vaccination of our workforce or require our unvaccinated employees to be tested weekly.This mandate, when issued, could result in employee attrition, difficulty securing future labor needs and may have an adverse effect on future profit margins.

While we continue to support our customers, there remains uncertainty regarding the duration and severity of this ongoing pandemic, or newly identified variants, and the effect it could ultimately have on our supply chain. We continue to closely monitor the situation as information becomes readily available, take actions to ensure the safety of our labor force, to abide by the requirements under CISA and to prepare for the OSHA regulations.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On November 10, 2020, the Company's Board of Directors authorized a $100 million share repurchase program pursuant to which the Company may repurchase its Common Stock (the ~~“2020~~"2020 Share ~~Authorization”~~Authorization"). Repurchases under the 2020 Share Authorization will be made through open market and/or private transactions, in accordance with applicable federal securities laws, and could include repurchases pursuant to Rule 10b5-1 trading plans, which allows stock repurchases when the Company might otherwise be precluded from doing so.

The following table provides information with respect to purchases of common stock of the Company made during the ~~three~~nine months ended ~~May 31,~~November 30, 2021, by the Company or any "affiliated purchaser" as defined in Rule 10b-18(a)(3) under the Exchange act:


Period	Period	Total Number of Share Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publically Announced Plans or Programs	Approximate Dollar Value that May Yet Be Used Under the Plans or Programs		Period	Total Number of Share Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value that May Yet Be Used Under the Plans or Programs
Beginning balance, February 29, 2021						$	84,002,349
Beginning balance, February 28, 2021								Beginning balance, February 28, 2021					$	84,002,349
March 1 through March 31	March 1 through March 31	60,649	$	49.47	60,649	83,941,700		March 1 through March 31	60,649	$	49.47	60,649	81,002,123
April 1 through April 30	April 1 through April 30	56,043	49.82		56,043	83,885,657		April 1 through April 30	56,043	49.82		56,043	78,209,907
May 1 through May 31	May 1 through May 31	9,078	51.92		9,078	83,876,579		May 1 through May 31	9,078	51.92		9,078	77,738,544

June 1 through June 30								June 1 through June 30	102,227	51.49		102,227	72,475,385
July 1 through July 30								July 1 through July 30	148,452	51.56		148,452	64,821,609
August 1 through August 31								August 1 through August 31	39,830	51.52		39,830	62,769,454
September 1 through September 30								September 1 through September 30	125,966	51.56		125,966	56,275,170
October 1 through October 31								October 1 through October 31	22,055	51.78		22,055	55,133,081
November 1 through November 30								November 1 through November 30	—	—		—	55,133,081
Total	Total	125,770	$	49.80	125,770	$	83,876,579	Total	564,300	$	51.16	564,300	$	55,133,081

Item 5.Other Information.

~~Change in Control Agreement~~

The Company’s Compensation Committee of the Board of Directors, in consultation with its independent compensation advisor, Meridian Compensation Partners, LLC (“Meridian”), conducted a review of the existing change in control severance benefits being provided to the Company’s executive officers (the “Executive Officers”). Based upon the review and adviceNone.

~~Table of~~ ~~Contents~~

provided to the Compensation Committee by Meridian, the Company’s Board of Directors approved certain modifications to its existing change in control severance benefits to ensure uniformity of terms and conditions among its Executive Officers and to align severance benefits with the market practices of the Company’s industry peer companies. Effective July 8, 2021, the Company entered into a standardized change in control form agreement (the “CIC Agreement”) with its Executive Officers, including our named executive officers (except for the Chief Executive Officer), whom will retain his existing change in control agreement. The material terms of the standardized form CIC Agreement states that if an Executive Officer is terminated (i) during the Change in Control Period, (ii) without Cause, or (iii) such Executive Officer resigns for Good Reason (all capitalized terms are defined in the form CIC Agreement which is attached as Exhibit 10.7, and is incorporated herein), the Executive Officers will be entitled to (i) any accrued but unpaid Annual Base Salary for the fiscal year in which employment ends (plus accrued and unpaid expenses reimbursable in accordance with Company polices; (ii) 24 months of Annual Cash Compensation (defined as Annual Base Salary and Target Cash Bonus) paid on a regular payroll cycle over a 24 month period; (iii) accelerated vesting of all outstanding time-based equity awards; and (iv) 24 months of medical, dental and vision insurance coverage (100% paid by the Company) substantially comparable to the coverage maintained by the Company for the Executive Officer immediately prior to the date of such termination.

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Item 6. Exhibits


3.1						Amended and Restated Certificate of Formation of AZZ Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by the Registrant on July 14, 2015)

3.2						Amended and Restated Bylaws of AZZ Inc. ~~(incorporated~~(incorporated by reference to Exhibit 3.2 to the ~~Current~~Quarterly Report on Form ~~8-K~~10-Q filed by the Registrant on ~~January 23, 2017)~~October 12, 2021)

10.1*						AZZ Inc. 2018 Employee Stock Purchase Plan (incorporated by reference to Appendix A to the Registrant's Definitive Proxy Statement on Form DEFA filed on May 25, 2018.).

10.2						Note Purchase Agreement, dated as of January 20, 2011, by and among AZZ incorporated and the purchasers identified therein (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on January 21, 2011).

10.3						Credit Agreement by and between AZZ Inc. as borrower, CitiBank,CitiBank, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer, and the other Lender's party ~~hereto.~~ ~~Filed Herewith.~~

10.4*						~~AZZ incorporated 2014 Long Term Incentive Plan~~hereto (incorporated by reference to ~~Appendix A~~Exhibit 10.3 to the ~~Registrant’s Definitive Proxy Statement~~Quarterly Report on Form ~~DEFA~~10-Q filed ~~May 29, 2014)~~by the Registrant on July 9, 2021).

10.5*						~~First Amendment to AZZ Inc. 2014 Long Term Incentive Plan~~ ~~(incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Registrant on January 21, 2016.~~
~~10.6~~10.4						Note Purchase Agreement, dated as of October 9, 2020, by and among AZZ Inc. and the purchasers identified therein (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q filed by the Registrant on October 13, 2020).
10.7*						~~Form of Change in Control Agreement by and between AZZ Inc. and certain Executive Officers thereof.~~ ~~Filed Herewith.~~
31.1						Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed Herewith.

31.2						Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed Herewith.

32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed Herewith.

32.2						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed Herewith.

101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						XBRL Taxonomy Extension Label Linkbase Document

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

* Management contract, compensatory plan or arrangement

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AZZ Inc.
(Registrant)

Date:

~~July 9, 2021~~January 10, 2022

By:

/s/ Philip A. Schlom

Philip A. Schlom
Chief Financial Officer

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		PAGE NO.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Cash Flows	6
	Condensed Consolidated Statements of Shareholders’ Equity	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1718
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2227
Item 4.	Controls and Procedures	2227

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	2328
Item 1A.	Risk Factors	2328
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2329
Item 5	Other Information	2329
Item 6.	Exhibits	2530

	SIGNATURES	2631