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 ~~August~~May 31, ~~2021~~2022


☐			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 ~~September~~June 30, ~~2021~~2022 the registrant had outstanding ~~24,839,567~~24,788,614 shares of common stock; $1.00 par value per share.

Table of Contents

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)

August 31, 2021 February 28, 2021
Assets
Current assets:
Cash and cash equivalents $ 15,488 $ 14,837
Accounts receivable (net of allowance for credit losses of $5,272 as of August 31, 2021 and $5,713 as of February 28, 2021) 133,430 128,127
Inventories:
Raw material 96,578 86,913
Work-in-process 6,533 4,453
Finished goods 1,328 1,546
Contract assets 61,355 58,056
Prepaid expenses and other 8,569 5,876
Assets held for sale 5,758 3,684
Total current assets 329,039 303,492
Property, plant and equipment, net 202,220 205,909
Operating lease right-of-use assets 46,828 37,801
Goodwill 353,637 353,881
Deferred Tax Assets 4,165 3,969
Intangibles and other assets, net 87,349 91,390
Total assets $ 1,023,238 $ 996,442
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 43,877 $ 41,034
Income tax payable 1,699 —
Accrued salaries and wages 20,296 22,606
Other accrued liabilities 31,362 27,136
Customer deposits 861 348
Contract liabilities 13,729 16,138
Lease liability, short-term 7,167 6,588
Total current liabilities 118,991 113,850
Debt due after one year, net 182,451 178,419
Lease liability, long-term 38,978 32,629
Deferred income taxes 38,569 39,283
Other long-term liabilities 5,823 8,969
Total liabilities 384,812 373,150
Commitments and contingencies 0 0
Shareholders’ equity:
Common stock, $1 par, shares authorized 100,000; 24,840 shares issued and outstanding at August 31, 2021 and 25,108 shares issued and outstanding at February 28, 2021 24,840 25,108
Capital in excess of par value 79,908 75,979
Retained earnings 559,207 547,289
Accumulated other comprehensive loss (25,529) (25,084)
Total shareholders’ equity 638,426 623,292
Total liabilities and shareholders' equity $ 1,023,238 $ 996,442


	May 31, 2022		February 28, 2022
Assets
Current assets:
Cash and cash equivalents	$	100,998	$	15,082
Accounts receivable (net of allowance for credit losses of $4,886 as of May 31, 2022 and $5,207 as of February 28, 2022)	255,749		167,016
Inventories:
Raw material	176,734		117,603
Work-in-process	9,032		7,285
Finished goods	3,649		1,212
Contract assets	155,863		74,629
Prepaid expenses and other	18,136		3,471
Assets held for sale	235		235
Total current assets	720,396		386,533
Property, plant and equipment, net	491,722		230,848
Right-of-use assets	51,909		43,286
Goodwill	918,877		385,613
Deferred tax assets	5,217		5,191
Intangibles and other assets, net	594,171		81,557
Total assets	$	2,782,292	$	1,133,028
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	185,645	$	43,987
Income tax payable	1,661		3,564
Accrued salaries and wages	27,261		28,424
Other accrued liabilities	57,477		24,092
Customer deposits	712		681
Contract liabilities	39,682		42,465
Lease liability, short-term	8,975		7,318
Debt due within one year	13,000		—

Total current liabilities	334,413		150,531
Debt due after one year, net	1,594,777		226,484
Lease liability, long-term	42,603		35,610
Deferred income taxes	48,137		47,672
Other long-term liabilities	74,803		5,366
Total liabilities	2,094,733		465,663
Commitments and contingencies	0		0
Shareholders’ equity:
Common stock, $1 par, shares authorized 100,000; 24,788 shares issued and outstanding at May 31, 2022 and 24,688 shares issued and outstanding at February 28, 2022	24,788		24,688
Capital in excess of par value	85,432		85,847
Retained earnings	604,039		584,154
Accumulated other comprehensive loss	(26,700)		(27,324)
Total shareholders’ equity	687,559		667,365
Total liabilities and shareholders' equity	$	2,782,292	$	1,133,028

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 August 31,				Six Months Ended August 31,					Three Months Ended May 31,
		2021		2020		2021		2020			2022		2021

Sales	Sales	$	216,447	$	203,372	$	446,273	$	416,664	Sales	$	314,398	$	229,826
Cost of sales	Cost of sales	161,332		157,278		333,231		328,363		Cost of sales	229,942		171,899
Gross margin	Gross margin	55,115		46,094		113,042		88,301		Gross margin	84,456		57,927

Selling, general and administrative	Selling, general and administrative	28,587		26,749		55,802		54,639		Selling, general and administrative	44,546		27,215
Restructuring and impairment charges		—		18,693		—		18,693

Operating income	Operating income	26,528		652		57,240		14,969		Operating income	39,910		30,712

Interest expense	Interest expense	1,754		2,470		3,451		5,104		Interest expense	7,473		1,697

Other (income) expense, net		918		92		(51)		1,547
Income (loss) before income taxes		23,856		(1,910)		53,840		8,318
Income tax expense (benefit)		4,878		(120)		12,525		4,567
Net income (loss)		$	18,978	$	(1,790)	$	41,315	$	3,751
Other expense (income), net										Other expense (income), net	798		(969)
Income before income taxes										Income before income taxes	31,639		29,984
Income tax expense										Income tax expense	7,562		7,647
Net income										Net income	$	24,077	$	22,337
Earnings per common share	Earnings per common share									Earnings per common share
Basic earnings (loss) per share		$	0.76	$	(0.07)	$	1.65	$	0.14
Diluted earnings (loss) per share		$	0.76	$	(0.07)	$	1.64	$	0.14
Basic earnings per share										Basic earnings per share	$	0.97	$	0.89
Diluted earnings per share										Diluted earnings per share	$	0.96	$	0.88

Cash dividends declared per common share	Cash dividends declared per common share	$	0.17	$	0.17	$	0.34	$	0.34	Cash dividends declared per common share	$	0.17	$	0.17

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 August 31, Six Months Ended August 31,
2021 2020 2021 2020
Net income (loss) $ 18,978 $ (1,790) $ 41,315 $ 3,751
Other comprehensive income (loss):
Foreign currency translation adjustments, net of income tax of $0 (3,096) 4,540 (445) 3,500
Interest rate swap, net of income tax of $0, $7, $0 and $14, respectively — (14) — (28)
Other comprehensive income (loss) (3,096) 4,526 (445) 3,472
Comprehensive income $ 15,882 $ 2,736 $ 40,870 $ 7,223


	Three Months Ended May 31,
	2022		2021
Net income	$	24,077	$	22,337
Other comprehensive income:
Unrealized translation gain	624		2,581

Other comprehensive income	624		2,581
Comprehensive income	$	24,701	$	24,918

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

Table of Contents

AZZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Six Months Ended August 31,					Three Months Ended May 31,
		2021		2020			2022		2021
Cash Flows From Operating Activities
Cash flows from operating activities						Cash flows from operating activities
Net income	Net income	$	41,315	$	3,751	Net income	$	24,077	$	22,337
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Bad debt expense		(521)		226
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt recoveries						Bad debt recoveries	(265)		(218)
Amortization and depreciation	Amortization and depreciation	22,083		23,149		Amortization and depreciation	15,119		11,084
Deferred income taxes	Deferred income taxes	(954)		(5,493)		Deferred income taxes	(2,722)		(892)
Loss on disposal of business		—		1,198
Non-cash restructuring and impairment charges		—		17,425

Net (gain) loss on sale of property, plant and equipment	Net (gain) loss on sale of property, plant and equipment	485		(113)		Net (gain) loss on sale of property, plant and equipment	(29)		(15)
Amortization of deferred borrowing costs	Amortization of deferred borrowing costs	330		269		Amortization of deferred borrowing costs	1,541		139
Share-based compensation expense	Share-based compensation expense	4,682		4,083		Share-based compensation expense	1,998		1,811
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	(7,910)		19,686		Accounts receivable	(10,625)		(7,966)
Inventories	Inventories	(13,184)		(480)		Inventories	(19,054)		(8,254)
Prepaid expenses and other	Prepaid expenses and other	(2,723)		1,372		Prepaid expenses and other	(12,452)		(5,419)
Other assets	Other assets	(2,605)		202		Other assets	300		(778)
Net change in contract assets and liabilities	Net change in contract assets and liabilities	(5,071)		(452)		Net change in contract assets and liabilities	(12,689)		(9,839)
Accounts payable	Accounts payable	2,661		(15,931)		Accounts payable	41,579		6,321
Other accrued liabilities and income taxes payable	Other accrued liabilities and income taxes payable	(830)		(16,726)		Other accrued liabilities and income taxes payable	(3,464)		2,749
Net cash provided by operating activities	Net cash provided by operating activities	37,758		32,166		Net cash provided by operating activities	23,314		11,060
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	2,537		397		Proceeds from sale of property, plant and equipment	33		23
Purchase of property, plant and equipment	Purchase of property, plant and equipment	(13,099)		(19,269)		Purchase of property, plant and equipment	(7,809)		(7,489)
Proceeds from sale of subsidiaries, net		—		8,341

Acquisition of subsidiaries, net of cash acquired						Acquisition of subsidiaries, net of cash acquired	(1,298,513)		—
Net cash used in investing activities	Net cash used in investing activities	(10,562)		(10,531)		Net cash used in investing activities	(1,306,289)		(7,466)
Cash Flows From Financing Activities
Proceeds from issuance of common stock		1,544		1,694
Cash flows from financing activities						Cash flows from financing activities

Payments for taxes related to net share settlement of equity awards	Payments for taxes related to net share settlement of equity awards	(2,149)		(554)		Payments for taxes related to net share settlement of equity awards	(2,313)		(2,101)
Proceeds from revolving loan	Proceeds from revolving loan	182,000		96,000		Proceeds from revolving loan	39,000		35,000
Payments on revolving loan	Payments on revolving loan	(178,000)		(127,000)		Payments on revolving loan	(116,000)		(28,000)

Proceeds from long term debt						Proceeds from long term debt	1,540,000		—
Payments of debt financing costs						Payments of debt financing costs	(87,555)		—

Repurchase and retirement of treasury stock	Repurchase and retirement of treasury stock	(21,233)		(6,379)		Repurchase and retirement of treasury stock	—		(6,264)
Payments of dividends	Payments of dividends	(8,510)		(8,892)		Payments of dividends	(4,192)		(4,245)
Net cash used in financing activities		(26,348)		(45,131)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	1,368,940		(5,610)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(197)		837		Effect of exchange rate changes on cash	(49)		(418)
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	651		(22,659)		Net increase (decrease) in cash and cash equivalents	85,916		(2,434)
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	15,082		14,837
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	15,488	$	14,028	Cash and cash equivalents at end of period	$	100,998	$	12,403

Supplemental disclosures	Supplemental disclosures					Supplemental disclosures
Cash paid for interest	Cash paid for interest	$	3,304	$	4,806	Cash paid for interest	$	4,161	$	394
Cash paid for income taxes	Cash paid for income taxes	$	14,360	$	9,358	Cash paid for income taxes	$	4,034	$	1,322

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

Table of Contents

AZZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)


		Three Months Ended August 31, 2021															Three Months Ended May 31, 2022
		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 May 31, 2021		25,071	$	25,071							$	75,600			$	559,173		$	(22,433)			$	637,411
Balance at February 28, 2022														Balance at February 28, 2022			24,688			$	24,688			$	85,847	$	584,154	$	(27,324)	$	667,365
Share-based compensation	Share-based compensation	—	—		2,871		—		—			2,871		Share-based compensation			—			—				1,998		—		—		1,998
Common stock issued under stock-based plans and related income tax expense	Common stock issued under stock-based plans and related income tax expense	18	18		(66)		—		—			(48)		Common stock issued under stock-based plans and related income tax expense			100			100				(2,413)		—		—		(2,313)
Common stock issued under employee stock purchase plan		41	41		1,503		—		—			1,544
Repurchase and retirement of treasury shares		(290)	(290)		—		(14,679)		—			(14,969)

Cash dividends paid	Cash dividends paid	—	—		—		(4,265)		—			(4,265)		Cash dividends paid			—			—				—		(4,192)		—		(4,192)
Net income	Net income	—	—		—		18,978		—			18,978		Net income			—			—				—		24,077		—		24,077
Foreign currency translation	Foreign currency translation	—	—		—		—		(3,096)			(3,096)		Foreign currency translation			—			—				—		—		624		624

Balance at August 31, 2021		24,840	$	24,840	$	79,908	$	559,207	$	(25,529)		$	638,426
Balance at May 31, 2022														Balance at May 31, 2022			24,788			$	24,788			$	85,432	$	604,039	$	(26,700)	$	687,559

		Six Months Ended August 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		—	—		4,682		—		—			4,682
Common stock issued under stock-based plans and related income tax expense		107	107		(2,256)		—		—			(2,149)
Common stock issued under employee stock purchase plan		41	41		1,503		—		—			1,544
Repurchase and retirement of treasury shares		(416)	(416)		—		(20,817)		—			(21,233)
Cash dividends paid		—	—		—		(8,510)		—			(8,510)
Net income		—	—		—		41,315		—			41,315
Foreign currency translation		—	—		—		(70)		(445)			(515)

Balance at August 31, 2021		24,840	$	24,840	$	79,908	$	559,207	$	(25,529)		$	638,426

Table of Contents

AZZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)


		Three Months Ended August 31, 2020																Three Months Ended May 31, 2021
		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 May 31, 2020		26,195	$	26,195							$	67,883				$	573,530				$	(31,952)				$	635,656
Balance at February 28, 2021														Balance at February 28, 2021				25,108					$	25,108				$	75,979		$	547,289	$	(25,084)	$	623,292
Share-based compensation	Share-based compensation	—	—		2,317		—		—			2,317		Share-based compensation				—					—					1,811			—		—		1,811
Common stock issued under stock-based plans and related income tax expense	Common stock issued under stock-based plans and related income tax expense	23	23		(39)		—		—			(16)		Common stock issued under stock-based plans and related income tax expense				89					89					(2,190)			—		—		(2,101)
Common stock issued under employee stock purchase plan		58	58		1,636		—		—			1,694
Repurchase and retirement of treasury shares		(200)	(200)		—		(6,179)		—			(6,379)
Cash dividends paid		—	—		—		(4,467)		—			(4,467)
Net Income (loss)		—	—		—		(1,790)		—			(1,790)
Foreign currency translation		—	—		—		—		4,540			4,540
Interest rate swap		—	—		—		—		(14)			(14)
Balance at August 31, 2020		26,076	$	26,076	$	71,797	$	561,094	$	(27,426)		$	631,541

		Six Months Ended August 31, 2020
		Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total

		Shares	Amount
Balance at February 29, 2020		26,148	$	26,148										$	66,703				$	572,414				$	(30,898)				$	634,367
Share-based compensation		—	—		4,083		—		—			4,083
Common stock issued under stock-based plans and related income tax expense		70	70		(625)		—		—			(555)
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	(200)	(200)		—		(6,179)		—			(6,379)		Repurchase and retirement of treasury shares				(126)					(126)					—			(6,138)		—		(6,264)
Cash dividends paid	Cash dividends paid	—	—		—		(8,892)		—			(8,892)		Cash dividends paid				—					—					—			(4,245)		—		(4,245)
Net income	Net income	—	—		—		3,751		—			3,751		Net income				—					—					—			22,337		—		22,337
Foreign currency translation	Foreign currency translation	—	—		—		—		3,500			3,500		Foreign currency translation				—					—					—			(70)		2,651		2,581
Interest rate swap		—	—		—		—		(28)			(28)
Balance at August 31, 2020		26,076	$	26,076	$	71,797	$	561,094	$	(27,426)		$	631,541

Balance at May 31, 2021														Balance at May 31, 2021				25,071					$	25,071				$	75,600		$	559,173	$	(22,433)	$	637,411

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, coil coating solutions, welding solutions, specialty electrical equipment and highly engineered services to the power generation, transmission, distribution, refining and industrial markets.

On May 13, 2022, the Company completed the acquisition of the Precoat Metals business division (“Precoat”) of Sequa Corporation (“Sequa”), a portfolio company of global investment firm Carlyle (the "Precoat Acquisition"). See Note 2 for further discussion about the Precoat Acquisition. As a result of the Precoat Acquisition, the Company had a change to its reportable segments, and added Precoat Metals as a new reportable segment. See Note 5.

The Company has ~~two~~three distinct operating segments: the Metal Coatings segment, the Precoat Metals segment and the Infrastructure Solutions segment. AZZ Metal Coatings provides ~~hot dip~~hot-dip galvanizing, spin galvanizing, powder coating, anodizing and plating, and other metal coating applications to the steel fabrication and other industries through 41 galvanizing plants and six surface technologies facilities located ~~throughout~~in the United States and Canada. AZZ Precoat Metals provides advanced applications of protective and decorative coatings and related value-added services for steel and aluminum coil primarily serving the construction; appliance; heating, ventilation, and air conditioning (HVAC); container; transportation and other end markets. AZZ Precoat Metals operates through 13 facilities located in the United States. 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~~2022 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,~~2022, 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 ~~August~~May 31, ~~2021,~~2022, the results of its operations for the three ~~and six~~ months ended ~~August~~May 31, ~~2021~~2022 and ~~2020,~~2021, and cash flows for the ~~six~~three months ended ~~August~~May 31, ~~2021~~2022 and ~~2020.~~2021. 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)

The continued uncertainty associated with COVID-19, and any of the ongoing variants, did not have a material adverse effect on the Company's results of operations for the three months ended ~~August~~May 31, ~~2021.~~2022. While the Company continues to support its 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 the Company's products and services or with its supply chain or its employees.

The impact of COVID-19 to the Company's personnel and operations has been limited. During the ~~second~~first quarter of fiscal ~~2022,~~2023, the Company continued to see improvement in sales and operating income in both ~~of its~~the Metal Coatings and Infrastructure Solutions operating segments. In addition, the Precoat Metals segment, which was acquired in the first quarter of fiscal 2023, was not materially impacted by COVID-19. However, labor market and supply chain challenges have increased during the current quarter, resulting in increased operating expenses as the constrained labor market and supply chain disruptions impacted the availability and cost of ~~labor. In addition, new vaccine mandates were announced on September 9, 2021. If these mandates are implemented, the extent of the regulatory impact is unclear~~labor and ~~could have an adverse impact on the Company's operations. The Company~~materials. 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 income or statements of cash flows for fiscal year ~~2022.~~

~~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 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.

2023 or beyond.

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Recently ~~Issued~~Adopted Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. ("ASU") 2021-08, Business combinations (Topic 805): Accounting for Contract Assets and Contract liabilities from Contracts with Customers (ASU 2021-08"), which requires contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606") at the acquisition date as if the acquirer had originated the contracts rather than adjust them to fair value. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2021-08 during the first quarter of fiscal 2023. The adoption of ASU 2021-08 did not have a material impact on the Company's financial condition, results of operations or cash flows as of May 31, 2022, including the acquisition of Precoat Metals during the first quarter of fiscal 2023.

In March 2020 and as clarified in January 2021, the FASB issued ~~Accounting Standards Update No. (“ASU”)~~ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial ~~Reporting”~~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. 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~~continues to evaluate its contracts and transactions for the potential application of ASU 2020-04, but ~~will continue~~there has been no material impact to ~~evaluate the possible adoption of any such expedients or exceptions, as well as the impact on~~ its financial condition, results of operations, ~~and~~or cash flows as of May 31, 2022.

2. Acquisitions

Precoat Acquisition

On May 13, 2022, the Company completed the acquisition of the Precoat Metals business division (“Precoat”) of Sequa Corporation (“Sequa”), a portfolio company of global investment firm Carlyle, for a purchase price of approximately $1.3 billion (the "Precoat Acquisition"). Headquartered in St. Louis, Missouri, Precoat is the leading independent provider of metal coil coating solutions in North America. Precoat engages in the advanced application of protective and decorative coatings and related value-added services for steel and aluminum coil primarily serving the construction; appliance; heating, ventilation and air conditioning (HVAC); container; transportation and other end markets. The acquisition represents a continued transition of the Company from a diverse holding company to a focused provider of coating and galvanizing services for critical applications.

The Precoat Acquisition was funded primarily with proceeds from the Term Loan B. See Note 7 for a description of the Term Loan B. The Company incurred acquisition costs of $11.5 million for the three months ended May 31, 2022, which are included in Selling, general and administrative expense in the accompanying condensed consolidated statements of operations. Precoat Metals contributed revenue of $43.7 million and operating income of $6.6 million to the Company's condensed consolidated statements of operations from May 13, 2022, through May 31, 2022.

The Company accounted for the Precoat Acquisition as a business combination under the acquisition method of accounting. Goodwill from the acquisition of $534.6 million represents the excess purchase price over the estimated value of net tangible and intangible assets and liabilities assumed, and is expected to be deductible for income tax purposes. The Company's chief operating decision maker will assess performance and allocate resources to Precoat separately from the Metal Coatings and Infrastructure Solutions segments; therefore, Precoat will be accounted for as a separate segment, the Precoat Metals segment. See Note 5 for more information about the Company's segments. Goodwill from the acquisition was allocated to the Precoat Metals segment. Assets acquired and liabilities assumed in the Precoat Acquisition were recorded at their estimated fair values as of the acquisition date.

The Company has not finalized these estimates; therefore, the fair value estimates set forth below are subject to adjustment during the ~~effective period.~~measurement period following the acquisition date. The final allocation of purchase consideration could include changes in the estimated fair value of working capital (including accounts receivable, inventories, contract assets, prepaid assets, account payable and accrued liabilities), right-of-use assets and lease liabilities, property, plant and equipment, intangible assets, deferred tax liabilities and other long-term liabilities. Adjustments in the purchase price allocation may require a change in the amount allocated to goodwill during the period in which the adjustments are determined.

When determining the fair values of assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. The Company has engaged third-party valuation experts to assist in the purchase price allocation, the recorded valuation of property and equipment, intangible assets, pension benefit obligation and certain other assets and liabilities. Preliminary estimates from third-party experts along with the analysis and expertise of management have formed the basis for the preliminary allocation. Detailed analysis and review of the condition, existence and utility of assets acquired, and assumptions inherent in the estimation of fair value of intangible assets and pension obligation is currently ongoing. Management believes that the current information provides a reasonable basis for estimating fair values of assets acquired and liabilities assumed. These

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estimates, judgments and assumptions are subject to change and should be treated as preliminary values as there could be significant changes upon final valuation. The Company expects to complete the final valuations within one year of the acquisition date.

The following table represents the preliminary summary of the assets acquired and liabilities assumed, in aggregate, related to the Precoat Acquisition, as of the date of the acquisition (in thousands):


	May 13, 2022
Assets

Accounts receivable	$	77,422
Inventories	44,309
Contract assets	70,731
Prepaid expenses and other	2,245
Property, plant and equipment	262,154
Right-of-use asset	10,954
Goodwill	534,599
Intangibles and other assets	513,546
Total fair value of assets acquired	$	1,515,960
Liabilities
Accounts payable	$	(99,223)
Accrued expenses	(31,891)
Other accrued liabilities	(3,741)
Customer deposits	(1,574)
Lease liability, short-term	(1,706)
Lease liability, long-term	(9,248)
Deferred tax liabilities	(3,100)
Other long-term liabilities	(66,247)
Total fair value of liabilities assumed	(216,730)
Total Purchase Price, net of cash acquired	$	1,299,230

DAAM Acquisition

On February 28, 2022, the Company entered into an agreement to acquire all the outstanding shares of DAAM Galvanizing Co. Ltd. ("DAAM"), a privately held hot-dip galvanizing company based in Edmonton, Alberta Canada, for approximately $35.5 million. DAAM currently operates two galvanizing facilities in Canada; one located in Edmonton, Alberta and a second in Saskatoon, Saskatchewan, as well as a service depot in Calgary, Alberta. The addition of DAAM expanded the Company's geographical coverage in the Northwest and enhanced the scope of metal coatings solutions in Canada. The business is included in the Company's Metal Coatings segment. The goodwill arising from this acquisition was allocated to the Metal Coatings segment the Company estimates that approximately 50% of the goodwill amount is expected to be deductible for income tax purposes.

The Company has engaged third-party valuation experts to assist in the purchase price allocation, the recorded valuation of property and equipment, intangible assets and certain other assets and liabilities. Preliminary estimates from third-party experts along with the analysis and expertise of management have formed the basis for the preliminary allocation. As of May 31, 2022, the purchase price allocation for certain assets acquired has not been finalized, including property, plant and equipment and intangible assets. As such, the fair values of the assets acquired and liabilities assumed should be treated as preliminary values as there could be significant changes upon final valuation.

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The following table represents the preliminary summary of the assets acquired and liabilities assumed, in aggregate, related to the DAAM acquisition, as of the date of the acquisition (in thousands):


	February 28, 2022
Assets
Accounts receivable	$	4,586
Inventories	3,119
Prepaid and other assets	23
Property, plant and equipment	14,436
Goodwill	24,369
Liabilities
Accounts payable and other accrued liabilities	(7,437)
Deferred tax liabilities	(3,596)
Total purchase price	$	35,500

Unaudited Pro Forma Information

The following unaudited pro forma financial information for the three months ended May 31, 2022 and 2021 combines the historical results of the Company and the acquisitions of Precoat Metals and DAAM, assuming that the companies were combined as of March 1, 2021 and include business combination accounting effects from the Precoat Acquisition, including amortization charges from acquired intangible assets, depreciation expense on acquired property, plant and equipment, interest expense on the financing transactions used to fund the Precoat Acquisition, acquisition-related transaction costs and tax-related effects. The pro forma information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions of Precoat Metals and DAAM had taken place on March 1, 2021 or of future operating performance.


	Three Months Ended May 31,
	2022		2021
Revenue	$	507,418	$	407,087
Net income	$	25,774	$	16,191

3. 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.

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

Three Months Ended August 31, Six Months Ended August 31,
2021 2020 2021 2020
Numerator:
Net income (loss) for basic and diluted earnings per common share $ 18,978 $ (1,790) $ 41,315 $ 3,751
Denominator:
Denominator for basic earnings per common share–weighted average shares 24,947 26,175 24,999 26,166
Effect of dilutive securities:
Employee and director equity awards 188 — 217 32
Denominator for diluted earnings per common share 25,135 26,175 25,216 26,198
Earnings (loss) per share basic and diluted:
Basic income (loss) per common share $ 0.76 $ (0.07) $ 1.65 $ 0.14
Diluted income (loss) per common share $ 0.76 $ (0.07) $ 1.64 $ 0.14


	Three Months Ended May 31,
	2022		2021
Numerator:
Net income	$	24,077	$	22,337
After-tax interest expense for Convertible Notes	547		—
Numerator for diluted earnings per share	$	24,624	$	22,337
Denominator:
Weighted average shares outstanding for basic earnings per share	24,709		25,051
Effect of dilutive securities:
Employee and director stock awards	161		219
Convertible Notes	805		—
Denominator for diluted earnings per share	25,675		25,270
Earnings per share basic and diluted:
Basic earnings per share	$	0.97	$	0.89
Diluted earnings per share	$	0.96	$	0.88

For the three ~~and six~~ months ended ~~August~~May 31, 2022 and 2021, ~~150,171~~81,647 and ~~130,764~~154,259 shares, respectively, were excluded from the calculation of diluted ~~EPS because the effect would be antidilutive. For the three and six months ended August 31, 2020, 28,319 and 15,863 shares, respectively, were excluded from the calculation of diluted EPS~~earnings per share because the effect would be antidilutive. These shares could be dilutive in future periods.

3.4. Sales

Disaggregated Sales

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

Three Months Ended August 31, Six Months Ended August 31,
2021 2020 2021 2020
Sales:
Industrial $ 132,033 $ 67,112 $ 285,615 $ 197,220
Transmission and distribution 47,619 97,619 89,255 146,676
Power generation 36,795 38,641 71,403 72,768
Total sales $ 216,447 $ 203,372 $ 446,273 $ 416,664

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	Three Months Ended May 31,
	2022		2021
Sales:
Industrial (General industry, Oil & Gas and Construction)	$	207,502	$	153,983
Transmission and distribution	72,312		43,667
Power generation	34,584		32,176
Total sales	$	314,398	$	229,826

See Note 45 for sales information by segment.

Contract Liabilities

The timing of ~~revenue~~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~~the Infrastructure Solutions ~~segment.~~and Precoat Metals segments. 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 ~~revenue~~sales recognition, resulting in contract assets. In addition, wethe Company sometimes ~~receive~~receives advances or deposits from ~~our~~ customers, before ~~revenue is~~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.

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The following table shows the changes in contract liabilities for the ~~six~~three months ended ~~August~~May 31, ~~2021~~2022 and ~~2020,~~2021, respectively (in thousands):


		2021		2020			2022		2021
Balance at February 28/29,		$	16,138	$	18,418
Balance at February 28,						Balance at February 28,	$	42,465	$	16,138
Contract liabilities added during the period	Contract liabilities added during the period	4,191		2,738		Contract liabilities added during the period	36,674		12,375
Sales recognized during the period	Sales recognized during the period	(6,600)		(7,400)		Sales recognized during the period	(39,457)		(11,415)
Balance at August 31,		$	13,729	$	13,756
Balance at May 31,						Balance at May 31,	$	39,682	$	17,098

The Company did not record any sales for the ~~six~~three months ended ~~August~~May 31, ~~2021~~2022 or ~~2020~~2021 related to performance obligations satisfied in prior periods. The Company expects to recognize sales, related to the ~~$13.7~~$39.7 million balance of contract liabilities as of ~~August~~May 31, ~~2021~~2022 of approximately ~~$6.5~~$32.1 million, ~~$5.9~~$7.4 million, ~~$1.1~~$0.1 million and ~~$0.2~~$0.1 million in fiscal ~~2022,~~ 2023, 2024, 2025 and ~~2025,~~2026, respectively.

4.5. Operating Segments

Segment Information

The Company has 23 distinct operating segments: the Metal Coatings segment, the Precoat Metals segment and the Infrastructure Solutions segment.

The Metal Coatings segment provides ~~hot dip~~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~~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 Precoat Metals segment provides aesthetic and corrosion protective coatings and related value-added services for steel and aluminum coil primarily serving the construction; appliance; heating, ventilation, and air conditioning (HVAC); container; transportation and other end markets in the United States.

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 August 31,				Six Months Ended August 31,					Three Months Ended May 31,
		2021		2020		2021		2020			2022		2021
Sales:	Sales:									Sales:

Metal Coatings	Metal Coatings	$	129,593	$	117,037	$	257,328	$	236,027	Metal Coatings	$	160,846	$	127,735
Precoat Metals										Precoat Metals	43,691		—
Infrastructure Solutions	Infrastructure Solutions	86,854		86,335		188,945		180,637		Infrastructure Solutions	109,861		102,091
Total sales	Total sales	$	216,447	$	203,372	$	446,273	$	416,664	Total sales	$	314,398	$	229,826

Operating income:	Operating income:									Operating income:
Metal Coatings	Metal Coatings	$	31,589	$	15,600	$	63,165	$	40,684	Metal Coatings	$	44,435	$	31,576
Precoat Metals										Precoat Metals	6,648		—
Infrastructure Solutions	Infrastructure Solutions	7,024		(4,310)		16,648		(5,358)		Infrastructure Solutions	12,851		9,624
Corporate	Corporate	(12,085)		(10,638)		(22,573)		(20,357)		Corporate	(24,024)		(10,488)
Total operating income	Total operating income	$	26,528	$	652	$	57,240	$	14,969	Total operating income	$	39,910	$	30,712

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


		August 31, 2021		February 28, 2021			May 31, 2022		February 28, 2022
Total assets:	Total assets:					Total assets:
Metal Coatings	Metal Coatings	$	488,301	$	480,778	Metal Coatings	$	594,207	$	575,088
Precoat Metals						Precoat Metals	1,538,809		—
Infrastructure Solutions	Infrastructure Solutions	505,602		489,986		Infrastructure Solutions	526,311		525,086
Corporate	Corporate	29,335		25,678		Corporate	122,965		32,854
Total	Total	$	1,023,238	$	996,442	Total	$	2,782,292	$	1,133,028

Financial Information About Geographical Areas

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


		Three Months Ended August 31,				Six Months Ended August 31,					Three Months Ended May 31,
		2021		2020		2021		2020			2022		2021
Sales:	Sales:									Sales:
United States	United States	$	192,471	$	170,651	$	383,586	$	359,733	United States	$	281,589	$	191,116
International	International	23,976		32,721		62,687		56,931		International	32,809		38,710
Total	Total	$	216,447	$	203,372	$	446,273	$	416,664	Total	$	314,398	$	229,826

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


		August 31, 2021		February 28, 2021			May 31, 2022		February 28, 2022
Property, plant and equipment, net:	Property, plant and equipment, net:					Property, plant and equipment, net:
United States	United States	$	179,476	$	180,718	United States	$	456,409	$	194,539
Canada	Canada	12,124		15,007		Canada	25,900		26,264
Other countries	Other countries	10,620		10,184		Other countries	9,413		10,045
Total	Total	$	202,220	$	205,909	Total	$	491,722	$	230,848

6. 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 ~~six~~three months ended ~~August~~May 31, 2022 and 2021 (in thousands):


~~Balance at February 28, 2021~~	$	~~4,079~~
~~Warranty costs incurred~~	~~(357)~~
~~Additions charged to income~~	~~492~~

~~Balance at August 31, 2021~~	$	~~4,214~~


	Three Months Ended May 31,
	2022		2021
Beginning balance	$	3,686	$	4,079
Warranty costs incurred	(721)		(112)
Amounts charged to income (expense)	(152)		170
Acquisitions	1,662		—
Ending balance	$	4,475	$	4,137

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7. Debt

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


		August 31, 2021		February 28, 2021			May 31, 2022		February 28, 2022
2017 Revolving Credit Facility		$	33,000	$	29,000

Revolving Credit Facility						Revolving Credit Facility	$	—	$	77,000
2020 Senior Notes	2020 Senior Notes	150,000		150,000		2020 Senior Notes	150,000		150,000
Term Loan B						Term Loan B	1,300,000		—
Convertible Notes						Convertible Notes	240,000		—
Total debt, gross	Total debt, gross	183,000		179,000		Total debt, gross	1,690,000		227,000
Unamortized debt issuance costs	Unamortized debt issuance costs	(549)		(581)		Unamortized debt issuance costs	(82,223)		(516)

Total debt, net	Total debt, net	$	182,451	$	178,419	Total debt, net	1,607,777		226,484

Less amount due within one year						Less amount due within one year	(13,000)		—
Total debt due after one year, net						Total debt due after one year, net	$	1,594,777	$	226,484

~~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 August 31,~~ 2021 ~~the Company was in compliance with all covenants or other requirements set forth in the debt agreements.~~

Credit Agreement

On July 8, 2021, the Company ~~refinanced its current unsecured revolving credit facility, which was scheduled to mature in March 2022, with~~entered into a ~~new~~ five-year unsecured revolving credit facility under ~~that certain~~a 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;

i.provides for a senior unsecured revolving credit facility with a principal amount of up to $400.0 million of 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, depending on the 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,~~credit;

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

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

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

~~The proceeds of the loans under~~On May 13, 2022, the 2021 Credit Agreement ~~are used primarily to finance working capital needs, capital improvements, dividends, future acquisitions and general corporate purposes.~~was repaid with proceeds from the 2022 Credit Agreement, which is described below.

~~The foregoing summary of certain terms~~2022 Credit Agreement and ~~provisions of~~Term Loan B

On May 13, 2022, the Company replaced 2021 Credit Agreement ~~does not purport to be complete and is qualified in its entirety by reference to the 2021~~with a new Credit Agreement ~~a copy of which is attached hereto~~(the "2022 Credit Agreement") by and among the Company, borrower, Citibank, N.A., as ~~Exhibit 10.3 to this Form 10-Q~~administrative and ~~is incorporated herein by reference.~~collateral agent, and the other agents and lender parties thereto the 2022 Credit Agreement. The 2022 Credit Agreement includes the following significant terms;

i.provides for a senior secured initial term loan in the aggregate principal amount of $1.3 billion (the "Term Loan B"), due May 13, 2029, which is secured by substantially all of the assets of the Company;

ii.provides for a senior secured revolving credit facility in the aggregate principal amount of $400.0 million (the "Revolving Credit Facility"), due May 13, 2027;

iii.includes a letter of credit sub-facility of up to $100.0 million, which is part of, and not in addition to, the Revolving Credit Facility;

iv.borrowings under the Term Loan B and the Revolving Credit Facility each bear an interest rate of Secured Overnight Financing Rate ("SOFR") plus 4.25%;

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

vi.includes a maximum quarterly leverage ratio financial covenant and an interest coverage ratio financial covenant;

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The proceeds of the advances under the Revolving Credit Facility will be utilized primarily to finance working capital needs, capital improvements, dividends, acquisitions and for general corporate purposes. The proceeds of the Term Loan B were used to finance a portion of the Precoat Acquisition, pay transaction-related costs owed under the Securities Purchase Agreement (defined below) and refinance certain prior indebtedness, including the repayment of outstanding borrowings under the 2021 Credit Agreement. The proceeds were also utilized to redeem 100% of the Company’s 2020 Senior Notes on June 6, 2022.

Outstanding principal of the Term Loan B is payable on the last business day of each May, August, November and February, beginning August 31, 2022, in a quarterly aggregate principal amount of $3.25 million, with the entire remaining principal amount due on May 13, 2029, the maturity date.

The effective interest rate for the 2022 Credit Facility and the Term Loan B was 4.91% at May 31, 2022.

The Company's credit agreement requires the Company to maintain a maximum Total Net Leverage Ratio (as defined in the loan agreement) no greater than 6.25 through November 2022. For each subsequent quarter, the maximum ratio decreases by 25 basis points through May 31, 2024, when the maximum Total Net Leverage Ratio reaches 4.5.

Convertible Subordinated Notes

On May 13, 2022, the Company completed the issuance of $240.0 million aggregate principal amount of 6.00% convertible subordinated notes due June 30, 2030 (the "Convertible Notes"). Interest on the Convertible Notes is payable semi-annually, on June 30 and December 31.

The Convertible Notes are convertible by the holder thereof at any time into shares of the Company's common stock at a price equal to a 25% premium to the volume-weighted average price of the Company's common stock over the trailing 30 trading days prior to the issuance date of the Convertible Notes. The Convertible Notes are exchangeable for 240,000 shares of the Company's 6.0% Series A Convertible Preferred Stock, subject to shareholder approval for the issuance of preferred shares. If exchanged, the Series A Preferred Stock will be convertible by the holder at any time into shares of the Company's common stock at a price equal to a 25% premium to the volume-weighted average price of the Company's common stock over the trailing 30 trading days, prior to the issuance date of the Convertible Notes. In addition, the Series A Preferred Stock will be subject to a minimum conversion threshold of 1,000 shares per conversion, and customary anti-dilution and dividend adjustments.

The Company used the proceeds of the Convertible Notes to fund the Company’s Precoat Acquisition.

The Company's debt agreements requires the Company to maintain certain affirmative and negative covenants. As of May 31, 2022, the Company was in compliance with all covenants and other requirements set forth in the debt agreements.

7.8. Leases

The Company is a lessee under various ~~operating~~ leases for facilities and equipment. As of May 31, 2022, the Company was the lessee for 153 operating leases with terms of 12 months or more and 12 finance leases. Many of the operating leases either have renewal options of between one and five years or convert to month-to-month agreements at the end of the specified lease term.

The Company’s operating leases are primarily for (i) operating facilities, (ii) vehicles and equipment used in operations, (iii) facilities used for back-office functions and (iv) equipment used for back-office functions. The majority of the Company’s long-term lease expenses are at fixed prices.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has a significant number of short-term leases, including month-to-month agreements, some of which continue in perpetuity until the lessor or the Company terminates the lease agreement. The Company's short-term lease agreements include expenses incurred hourly, daily, monthly and for other durations for a time period of one year or less.

The Company’s future lease commitments as of May 31, 2022 do not reflect all of the Company’s short-term lease commitments.

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The following table outlines the classification of the Company's right-of-use assets and lease liabilities in the consolidated balance sheets as of May 31, 2022 and fiscal year end 2022 (in thousands):


Balance Sheet	Classification	May 31, 2022		February 28, 2022
Assets
Right-of-use assets	Right-of-use assets	$	51,909	$	43,286
Liabilities
Operating lease liabilities ― ST	Lease liability - short-term	8,786		7,140
Operating lease liabilities ― LT	Lease liability - long-term	41,978		34,965
Finance lease liabilities ― ST	Lease liability - short-term	189		178
Finance lease liabilities ― LT	Lease liability - long-term	625		645

Supplemental information related to the Company's portfolio of operating leases was as follows (in thousands):


		Three Months Ended August 31,				Six Months Ended August 31,					Three Months Ended May 31,
		2021		2020		2021		2020			2022		2021
Operating cash flows from operating leases included in lease liabilities	Operating cash flows from operating leases included in lease liabilities	$	2,257	$	2,216	$	4,534	$	4,335	Operating cash flows from operating leases included in lease liabilities	$	2,419	$	2,299
Lease liabilities obtained from new ROU assets - operating	Lease liabilities obtained from new ROU assets - operating	473		1,324		13,120		1,528		Lease liabilities obtained from new ROU assets - operating	11,070		12,661

Operating and financing cash flows from financing leases included in lease liabilities	Operating and financing cash flows from financing leases included in lease liabilities	20		—		38		—		Operating and financing cash flows from financing leases included in lease liabilities	52		18
Lease liabilities obtained from new ROU assets - financing	Lease liabilities obtained from new ROU assets - financing	14		—		14		—		Lease liabilities obtained from new ROU assets - financing	38		—


		August 31, 2021		February 28, 2021			May 31, 2022		February 28, 2022
Weighted-average remaining lease term - operating leases (years)	Weighted-average remaining lease term - operating leases (years)	8.19		6.92		Weighted-average remaining lease term - operating leases (years)	7.28		7.90
Weighted-average discount rate - operating leases	Weighted-average discount rate - operating leases	4.54	%	4.71	%	Weighted-average discount rate - operating leases	4.48	%	4.56	%
Weighted-average remaining lease term - financing leases (years)	Weighted-average remaining lease term - financing leases (years)	3.75		4.25		Weighted-average remaining lease term - financing leases (years)	4.48		4.73
Weighted-average discount rate - financing leases	Weighted-average discount rate - financing leases	3.92	%	4.0	%	Weighted-average discount rate - financing leases	2.99	%	2.95	%

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


		Three Months Ended August 31,				Six Months Ended August 31,					Three Months Ended May 31,
		2021		2020		2021		2020			2022		2021
Cost of sales	Cost of sales	$	2,852	$	2,563	$	5,397	$	5,784	Cost of sales	$	3,226	$	2,546
Selling, general and administrative	Selling, general and administrative	987		1,135		2,121		2,384		Selling, general and administrative	946		1,130
Total lease expense	Total lease expense	$	3,839	$	3,698	$	7,518	$	8,168	Total lease expense	$	4,172	$	3,676

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As of ~~August~~May 31, ~~2021,~~2022, maturities of the Company's lease liabilities were as follows (in thousands):

Fiscal year: Operating Leases Finance Leases Total
2022 (remaining 6 months) $ 4,569 $ 40 $ 4,609
2023 8,762 80 8,842
2024 7,867 80 7,947
2025 6,771 77 6,848
2026 5,345 16 5,361
Thereafter 21,773 — 21,773
Total lease payments 55,087 293 55,380
Less imputed interest (9,215) (20) (9,235)
Total $ 45,872 $ 273 $ 46,145

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.


Fiscal year:	Operating Leases		Finance Leases		Total
2023	$	8,254	$	158	$	8,412
2024	10,144		211		10,355
2025	9,155		203		9,358
2026	7,608		139		7,747
2027	6,815		111		6,926
Thereafter	17,851		46		17,897
Total lease payments	59,827		868		60,695
Less imputed interest	(9,064)		(53)		(9,117)
Total	$	50,763	$	815	$	51,578

9. Income Taxes

The provision for income taxes reflects an effective tax rate of ~~20.4%~~23.9% for the three months ended ~~August~~May 31, ~~2021, as~~2022, compared to ~~6.3%~~25.5% for the respective prior year comparable period. The increase in the effective tax rate was primarily attributable to the impact of the restructuring and impairment charges recognized in fiscal 2021 on book earnings in the prior year quarter compared to the current quarter ended August 31, 2021. The Company recorded discrete items in the second quarter of the prior year and the current year; however, since book income was significantly lower in the prior year, the effective tax rate was impacted more significantly by the discrete items.

~~For the six~~three months ended ~~August~~May 31, ~~2021, the effective tax rate was 23.3%, compared to 54.9% for the prior year comparable period.~~2021. The decrease in the effective tax rate was primarily attributable to ~~the impact of the restructuring and impairment charges recognized in fiscal 2021 on book income. The Company~~unfavorable adjustments recorded ~~discrete items in the second quarter of the prior year and the current year; however, since book income was significantly lower~~ in the prior year ~~the effective tax rate was impacted more significantly by the discrete items, as well as~~comparable period, related to uncertain tax ~~positions that were recorded in the first quarter of fiscal year 2021.~~positions.

9.10. 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 ~~six~~three months ended ~~August~~May 31, 2022, to prioritize repayments of debt, including debt incurred to finance the Precoat Acquisition, the Company did not repurchase shares of common stock under the 2020 Share Authorization. During the three months ended May 31, 2021, the Company repurchased ~~416,279~~125,770 shares of ~~its~~ common ~~shares~~stock for $6.3 million, or $49.80 per share.

11. Defined Benefit Pension Plan

In the Company's Precoat Metals segment, certain employees of the Company participate in a defined benefit pension plan sponsored and administered by the Company. The pension plan calls for benefits to be paid to eligible employees at retirement, based primarily upon years of service and compensation rates near retirement. In conjunction with the acquisition of Precoat Metals, the Company assumed an accumulated benefit obligation in excess of related plan assets associated with the defined benefit pension plan of $44.9 million, which is included in "Other long-term liabilities" in the ~~amount~~consolidated balance sheets. See Note 2 for a discussion of ~~$21.2 million at an average purchase price~~the acquisition of ~~$51.01 under the 2020 Share Authorization.~~Precoat Metals.

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~~10.~~12. 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 ~~August~~May 31, ~~2021, one business in our Infrastructure Solutions segment and~~2022, one non-operating location in our Metal Coatings segment ~~are~~remains classified as held for sale. The assets ~~and liabilities~~ of the ~~businesses~~business include property, plant and equipment of $0.2 million. The assets of the business 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.~~

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


	~~As of August 31, 2021~~
~~Assets~~
~~Accounts receivable~~	$	~~4,580~~
~~Inventories~~	~~1,762~~
~~Contract assets~~	~~4,094~~
~~Other current assets~~	89
~~Property, plant and equipment~~	~~1,301~~
~~Other assets~~	~~126~~
~~Goodwill~~	~~1,693~~

~~Liabilities~~
~~Accounts payable~~	~~879~~
~~Contract liabilities~~	~~925~~
~~Other accrued liabilities~~	~~2,543~~
~~Lease liability – long term~~	50
~~Total carrying value~~	~~9,248~~
~~Less: Impairment of carrying value of remaining assets held for sale to estimated sales price(1)~~	~~(3,490)~~
~~Fair value of disposal group~~	$	~~5,758~~
~~(1)~~ ~~Impairment charges of $3,490 were recognized for the three months ended August 31, 2020.~~

sheets.

~~11. 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 six months ended August 31, 2021, the Company did not recognize any restructuring and impairment charges. During the six months ended August 31, 2020, the Company recognized $18.7 million for impairment charges and a loss on the sale of the Galvabar business, which are included in "Restructuring and impairment charges" in the consolidated statements of operations.

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~~The restructuring and impairment charges for the six months ended August 31, 2020 are summarized in the table below (in thousands):~~

Six Months Ended August 31, 2020
` Metal Coatings Infrastructure Solutions Total
Write down on assets held for sale to estimated sales price $ 3,161 $ 4,100 $ 7,261
Write down of assets expected to be abandoned 6,965 — 6,965
Loss on sale of subsidiaries 1,198 — 1,198
Write down of excess inventory — 2,511 2,511
Costs associated with assets held for sale — 758 758
Total charges $ 11,324 $ 7,369 $ 18,693

~~Infrastructure Solutions Segment~~

During the six months ended August 31, 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 write down of $2.5 million to record the inventory at its current market value.

~~Metal Coatings Segment~~

During the six months ended August 31, 2020, the Company approved a plan to close certain locations within the Metal Coatings segment in future periods. Management performed an analysis of the assets at each location expected to be closed.~~For assets that will not be transferred to another location for use in operations, management wrote the assets down to reflect a decrease in the estimated useful life and lower value to the Company.~~

~~The following table summarizes the charges recognized during the six months ended August 31, 2020 related to locations that have been closed (in thousands):~~


	~~Six Months Ended August 31, 2020~~

~~Inventory write down~~	$	~~336~~
~~Property & equipment write downs~~	~~2,999~~
~~Intangible impairment~~	~~3,258~~
~~Other~~	~~372~~
~~Total~~	$	~~6,965~~

~~12.~~13. 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.

Environmental

The Company assumed certain environmental liabilities as part of the Precoat Acquisition described in Note 2. The preliminary estimated fair value of these liabilities was $22.2 million, of which $1.7 million is classified as current. Environmental remediation liabilities include costs directly associated with site investigation and clean up, such as materials, external contractor costs, legal and consulting expenses and incremental internal costs directly related to the remedy. Estimates used to record environmental remediation liabilities are based on the Company's best estimate of probable future costs based on site-specific facts and circumstances known at the time of the estimate and these estimates are updated on a quarterly basis. Estimates of the cost for the likely remedy are developed using internal resources or by third-party environmental engineers or other service providers. The Company records the environmental remediation liabilities that represent the points in the range of estimates that are most probable, or the minimum amount when no amount within the range is a better estimate than any other amount.

The Company accrues the anticipated cost of environmental remediation when the obligation is probable and can be reasonably estimated. While any revisions could be material to the operating results of any fiscal quarter or fiscal year, the Company does not expect such additional expenses would have a material adverse effect on its liquidity or financial condition.

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~~13.~~14. Subsequent Event

On ~~August 27, 2021, one of the Company's affiliates (the "Affiliate"~~June 23, 2022, The Company and Fernweh Group LLC ("Fernweh"), jointly entered into a definitive agreement whereby AZZ will contribute its AZZ Infrastructure Solutions Segment (“AIS”) to AIS Investment Holdings LLC (the “AIS JV”), and sell a 60% interest in the AIS JV to Fernweh at an ~~agreement pursuant~~implied enterprise value of AIS of $300.0 million. The sale is expected to ~~which~~result in cash proceeds to AZZ of approximately $228.0 million, subject to certain customary purchase price adjustments. As part of recognizing the ~~Affiliate agreed~~AIS as held for sale in accordance with GAAP, the Company is required to ~~sell 60%~~measure AIS at the lower of its ~~equity interests in its Chinese subsidiary ("Chinese Target")~~carrying amount or fair value less cost to ~~an unrelated Chinese entity.~~sell. The Company will ~~retain 40% interest~~complete this assessment during its second quarter of fiscal year 2023. The Company expects the assessment will result in a non-cash loss on disposal of approximately $35 to $65 million. The loss on disposal will be recorded as part of discontinued operations in the ~~Chinese Target through a joint venture arrangement. The Chinese Target will be included in the Company's Infrastructure Solutions segment and will conduct operations in China.~~Company’s financial statements. Following the ~~closing~~close of the transaction, the Company anticipates that the ~~Chinese Target~~AIS JV will be deconsolidated and the Company's 40% joint venture investment will be accounted for under the equity method of accounting. The transaction, which is subject to certain closing conditions, is expected to close ~~during~~before the ~~Company's 2022~~end of fiscal ~~year.~~2023.

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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," "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~~ power generation markets, electrical transmission and distribution markets, the industrial markets and the 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, including governmental issued mandates regarding the ~~same.~~same in the jurisdictions in which we operate, sell to, or from whom we purchase. We could also experience additional increases in labor costs, components and raw materials, including zinc, ~~and~~which is used in our hot-dip galvanizing process, natural gas, which ~~are~~is used in our ~~hot dip~~hot-dip galvanizing ~~process;~~and coil coating processes; 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~~2022 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 inwhen 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,~~2022, and with the condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS

Strategy

We have a developed strategy and periodically review our ~~strategy against our~~ performance, opportunities, market conditions and competitive threats. ~~During~~On May 13, 2022, the ~~third quarter~~Company completed the acquisition of ~~fiscal 2021, we publicly announced strategic~~the Precoat Metals business division (“Precoat”) of Sequa Corporation (“Sequa”), a portfolio company of global investment firm Carlyle, for a purchase price of approximately $1.3 billion (the "Precoat Acquisition"). As part of the Precoat Acquisition, the Company acquired the Precoat Metals division from the Seller, which engages in the business of applying protective and ~~financial initiatives to enhance shareholder value. These initiatives include a comprehensive, Board-led review of~~decorative coatings and films for continuous steel and aluminum coil and performing ancillary services related thereto. The Precoat Acquisition advances our portfolio and capital allocation and the engagement of leading independent financial, legal and tax advisors in support of this review. We have continued these initiatives in fiscal 2022. 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. See Note 2 to our consolidated financial statements included in this Quarterly Report on Form 10-Q for more information about the Precoat Acquisition.

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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 ~~August~~May 31, ~~2021.~~2022. 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 or our employees.

The impact of COVID-19 to ~~our~~the Company's personnel and operations has been limited. During the ~~second~~first quarter of fiscal ~~2022, we~~2023, the Company continued to see improvement in sales and operating income in ~~both of our~~its Metal Coatings and Infrastructure Solutions operating segments. In addition, the Precoat Metals segment, which was acquired in the first quarter of fiscal 2023, was not materially impacted by COVID-19. However, labor market

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and supply chain challenges have increased during the current quarter, resulting in increased operating expenses as the constrained labor market and supply chain disruptions impacted the availability and cost of ~~labor. In addition, new vaccine mandates were announced on September 9, 2021. If these mandates are implemented, the extent of the regulatory impact is unclear~~labor and could have an adverse impact on our operations. We cannot reasonably estimate the length or severity of this pandemic, or the extent to which the disruption may materially impact our consolidated balance sheet, statements of income or statements of cash flows for fiscal year 2022. See "Item 1A. Risk Factors," for an update on our risk factor related to COVID-19.materials.

Overview

We have ~~two~~three distinct operating segments, the Metal Coatings segment, the Precoat Metals 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 45 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

During the six months ended August 31, 2021, we continued to execute a plan to divest certain non-core businesses, which was approved by the board of directors in fiscal 2021. As of August 31, 2021, one business in our Infrastructure Solutions segment and one non-operating location in our Metal Coatings segment are 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.

Orders and Backlog

Our backlog relates entirely to our Infrastructure Solutions segment and excludes transaction taxes for certain foreign subsidiaries. As of ~~August~~May 31, ~~2021,~~2022, backlog increased ~~$15.4~~$2.9 million from February 28, ~~2021,~~2022, to ~~$201.5~~$307.4 million. Our backlog ~~in the Infrastructure Solutions segment decreased $9.2~~increased $121.3 million, or ~~4.3%~~65.2%, as compared to ~~$210.6~~$186.1 million for the same period in the prior fiscal year. The ~~decrease~~increase in backlog is primarily due to ~~the~~an increase in backlog in our Electrical platform, partially offset by a continued reduction of international backlog, including China, related to several non-recurring ~~contracts, and, to a lesser extent, divestitures that occurred in fiscal 2021. The decrease was partially offset by an increase in backlog in each of the remaining product lines within the segment.~~contracts. For the three months ended ~~August~~May 31, ~~2021, backlog was favorably impacted by an increase in our incoming~~2022, net bookings ~~of $23.2~~increased $87.5 million, or ~~11.1%~~38.1%, to $317.3 million, compared to same period of fiscal ~~2021, due to~~2022, as a ~~decrease~~result of strong bookings in ~~some COVID-19 related restrictions during the quarter.~~our Electrical platform and continued strong sales in our Metal Coatings segment. The ~~decrease in restrictions also favorably impacted our~~ book-to-sales ratio ~~which~~ increased to ~~1.07,~~1.01, from 1.03. 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.1.00.

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


		Period Ended			Period Ended				Period Ended			Period Ended
Backlog	Backlog	2/28/2021	$	186,119	2/29/2020	$	243,799	Backlog	2/28/22	$	304,522	2/28/2021	$	186,119
Net bookings	Net bookings		229,805			174,865		Net bookings		317,302			229,805

Sales recognized			(229,826)			(213,293)
Backlog		5/31/2021	186,098		5/31/2020	205,371
Book to sales ratio			1.00			0.82
Net bookings			231,821			208,627
Sales recognized	Sales recognized		(216,447)			(203,372)		Sales recognized		(314,398)			(229,826)
Backlog	Backlog	8/31/2021	$	201,472	8/31/2020	$	210,626	Backlog	5/31/2022	$	307,426	5/31/2021	$	186,098
Book to sales ratio	Book to sales ratio		1.07			1.03		Book to sales ratio		1.01			1.00

2022

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QUARTER ENDED ~~AUGUST~~MAY 31, ~~2021~~2022 COMPARED TO THE QUARTER ENDED ~~AUGUST~~MAY 31, ~~2020~~2021

Segment Sales

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


		Three Months Ended August 31,				Three Months Ended May 31,
		2021		2020				2022		2021
Sales:	Sales:						Sales:
Metal Coatings	Metal Coatings	$	129,593	$	117,037		Metal Coatings	$	160,846	$	127,735
Precoat Metals							Precoat Metals	43,691		—
Infrastructure Solutions	Infrastructure Solutions	86,854		86,335			Infrastructure Solutions	109,861		102,091
Total Sales	Total Sales	$	216,447	$	203,372		Total Sales	$	314,398	$	229,826

For the three months ended ~~August~~May 31, ~~2021,~~2022 (the "current quarter"), consolidated sales increased ~~$13.1~~$84.6 million, or ~~6.4%~~36.8%, as compared to the ~~same period in fiscal 2021.~~three months ended May 31, 2021 (the "prior year quarter"). Sales for the Metal Coatings segment increased ~~$12.6~~$33.1 million, or ~~10.7%~~25.9%, for the ~~three months ended August 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~~an increase in the ~~fourth quarter of fiscal 2021. The~~ volume of steel ~~processed~~galvanized.

Sales for the Precoat Metals segment, which was acquired on May 13, 2022, were $43.7 million for the current quarter.

Sales for the Infrastructure Solutions segment increased ~~2.6% in~~$7.8 million, or 7.6%, for the current quarter, compared to the prior year quarter.

~~Sales for the Infrastructure Solutions segment increased $0.5 million, or 0.6%, for the three months ended August 31, 2021 as compared to the same period in fiscal 2021.~~ In the Electrical platform, the increase in sales ~~increased compared to the prior year. The increase is~~was primarily due to ~~an increase in backlog and sales~~increased demand for ~~switchgear and enclosure~~most of our products, ~~in our domestic operations,~~ partially offset by lower sales ~~in China as projects near completion. This~~for our high voltage bus systems. The increase was partially offset by ~~a decrease in~~decreased sales in ~~the~~our Industrial platform, primarily due to net sales decreases in our international operations, ~~and a decrease related to a divestiture in the third quarter of fiscal 2021,~~ partially offset by an increase in our domestic ~~operations.~~sales.

Segment Operating Income

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


		Three Months Ended August 31, 2021								Three Months Ended August 31, 2020									Three Months Ended May 31, 2022										Three Months Ended May 31, 2021
		Metal Coatings		Infra- structure Solutions		Corporate		Total		Metal Coatings		Infra- structure Solutions		Corporate		Total			Metal Coatings		Precoat Metals		Infra- structure Solutions		Corporate		Total		Metal Coatings		Precoat Metals		Infra- structure Solutions		Corporate		Total
Operating income (loss):	Operating income (loss):																	Operating income (loss):
Sales	Sales	$	129,593	$	86,854	$	—	$	216,447	$	117,037	$	86,335	$	—	$	203,372	Sales	$	160,846	$	43,691	$	109,861	$	—	$	314,398	$	127,735	$	—	$	102,091	$	—	$	229,826
Cost of sales	Cost of sales	93,758		67,574		—		161,332		86,091		71,187		—		157,278		Cost of sales	111,999		33,501		84,442		—		229,942		92,078		—		79,821		—		171,899
Gross margin	Gross margin	35,835		19,280		—		55,115		30,946		15,148		—		46,094		Gross margin	48,847		10,190		25,419		—		84,456		35,657		—		22,270		—		57,927
Selling, general and administrative	Selling, general and administrative	4,246		12,256		12,085		28,587		4,022		12,089		10,638		26,749		Selling, general and administrative	4,412		3,542		12,568		24,024		44,546		4,081		—		12,646		10,488		27,215
Restructuring and impairment charges		—		—		—		—		11,324		7,369		—		18,693

Total operating income (loss)	Total operating income (loss)	$	31,589	$	7,024	$	(12,085)	$	26,528	$	15,600	$	(4,310)	$	(10,638)	$	652	Total operating income (loss)	$	44,435	$	6,648	$	12,851	$	(24,024)	$	39,910	$	31,576	$	—	$	9,624	$	(10,488)	$	30,712

Operating income for the Metal Coatings segment increased ~~$16.0~~$12.9 million, or ~~102.5%~~40.7%, for the ~~three months ended August 31, 2021, as~~current quarter, compared to the ~~same period in fiscal 2021.~~prior year quarter. The current quarter increase was ~~also~~ due to ~~the~~ improved sales as described above and the achievement of operational efficiencies in our ~~surface technologies~~Surface Technologies platform. In

Operating income for the ~~prior year quarter, operating income~~Precoat Metals segment, which was ~~also significantly impacted by~~acquired on May 13, 2022, was $6.6 million for the ~~loss on sale of a subsidiary and impairment and restructuring charges of $11.3 million.~~current quarter.

Operating income for the Infrastructure Solutions segment increased by ~~$11.3~~$3.2 million, or ~~263.0%~~33.5%, for the ~~three months ended August 31, 2021 as~~current quarter, compared to the ~~same period in fiscal 2021.~~prior year quarter. In the Electrical platform, operating income increased for our enclosures, bus systems and tubing products. The increase was ~~related to the increase~~partially offset by a decrease in ~~sales as noted above and cost controls implemented in fiscal 2021 across the platform to mitigate disrupted markets.~~operating income for our switchgear products. In the ~~prior year quarter, operating income was also significantly impacted by impairment and restructuring charges of $7.4 million.~~

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Industrial platform, operating income increased for our domestic operations, partially offset by a decrease in operating income in our international operations.

Corporate expenses increased ~~$1.4~~$13.5 million, or ~~13.6%~~129.1%, for the ~~three months ended August 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 external consulting~~acquisition costs ~~associated with~~related to the ~~previously announced strategic review.~~Precoat Acquisition.

Other (income) expense, net

Other expense was ~~$0.9~~$0.8 million for the ~~three months ended August 31, 2021, as~~current quarter, compared to ~~$0.1~~other income of $1.0 million for the ~~same period in fiscal 2020.~~prior year quarter. The increase was primarily due to unfavorable foreign exchange transaction adjustments in the current year.

Interest Expense

Interest expense for the ~~three months ended August 31, 2021 decreased $0.7~~current quarter increased $5.8 million, or ~~29.0%~~340.4%, to ~~$1.8~~$7.5 million, as compared to ~~$2.5~~$1.7 million for the ~~respective~~ prior ~~period.~~year quarter. The ~~decrease~~increase in interest expense was primarily attributable to the ~~Company's 2020 Senior~~additional debt that was obtained in conjunction with the Precoat Acquisition, including the Term Loan B of $1.3 billion and the Convertible 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.of $240.0 million.

Income Taxes

The provision for income taxes reflects an effective tax rate of ~~20.4%~~23.9% for the ~~three months ended August 31, 2021, as~~current quarter, compared to ~~6.3%~~25.5% for the respective prior year comparable period. The increase in the effective tax rate was primarily attributable to the impact of the restructuring and impairment charges recognized in fiscal 2021 on book earnings in the prior year quarter compared to the current quarter ended August 31, 2021. The Company recorded discrete items in the second quarter of the prior year and the current year; however, since book income was significantly lower in the prior year, the effective tax rate was impacted more significantly by the discrete items.

~~SIX MONTHS ENDED AUGUST 31, 2021 COMPARED TO THE SIX MONTHS ENDED AUGUST 31, 2020~~

~~Segment Sales~~

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

Six Months Ended August 31,
2021 2020
Sales:
Metal Coatings $ 257,328 $ 236,027
Infrastructure Solutions 188,945 180,637
Total Sales $ 446,273 $ 416,664

For the six months ended August 31, 2021, consolidated sales increased $29.6 million, or 7.1%, as compared to the same period in fiscal 2021. Sales for the Metal Coatings segment increased $21.3 million, or 9.0%, for the six months ended August 31, 2021, as compared to the same period in fiscal 2021. The increase was primarily due to improved price realization for our superior quality and service and the acquisition of a metal coatings facility in the fourth quarter of fiscal 2021. The volume of steel processed increased slightly in the current period, compared to the prior year period.

Sales for the Infrastructure Solutions segment increased $8.3 million, or 4.6%, for the six months ended August 31, 2021 as compared to the same period in fiscal 2021. In the Electrical platform, sales increased compared to the prior year, primarily due to an increase in our Switchgear operations, partially offset by lower sales in our Bus Duct operations, as sales in China are lower as projects near completion. In the Industrial platform, the increase was primarily due to sales increases in both domestic and international operations (as the prior year was significantly impacted by COVID-19), partially offset by a decrease related to a divestiture in the third quarter of fiscal 2021.

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~~Segment Operating Income~~

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

Six Months Ended August 31, 2021 Six Months Ended August 31, 2020
Metal Coatings Infra-
structure Solutions Corporate Total Metal Coatings Infra-
structure Solutions Corporate Total
Operating income (loss):
Sales $ 257,328 $ 188,945 $ — $ 446,273 $ 236,027 $ 180,637 $ — $ 416,664
Cost of sales 185,836 147,395 — 333,231 175,430 152,933 — 328,363
Gross margin 71,492 41,550 — 113,042 60,597 27,704 — 88,301
Selling, general and administrative 8,327 24,902 22,573 55,802 8,589 25,693 20,357 54,639
Restructuring and impairment charges — — — — 11,324 7,369 — 18,693
Total operating income (loss) $ 63,165 $ 16,648 $ (22,573) $ 57,240 $ 40,684 $ (5,358) $ (20,357) $ 14,969

Operating income for the Metal Coatings segment increased $22.5 million, or 55.3%, for the six months ended August 31, 2021, as compared to the same period in fiscal 2021. The increase was primarily due to impairment and restructuring charges recognized in fiscal 2021 of $11.3 million, the increase in sales described above and the achievement of operational efficiencies in our surface technologies platform.

Operating income for the Infrastructure Solutions segment increased by $22.0 million, or 410.7%, for the six months ended August 31, 2021 as compared to the same period in fiscal 2021. Gross margins improved on operating leverage within both the Industrial and Electrical platforms compared to prior year. The increase was due to the increase in sales as noted above, as well as cost controls implemented in fiscal 2021 and maintained as volume improved year over year. In addition, in the prior year to date period, operating income was impacted by an impairment on assets being classified as assets held for sale and other asset impairments of $7.4 million.

Corporate expenses increased $2.2 million, or 10.9%, for the six months ended August 31, 2021, as compared to the same period in fiscal 2021. The increase is primarily due to increases in administrative external consulting costs associated with the previously announced strategic review.

~~Other (income) expense, net~~

Other income was $0.1 million for the six months ended August 31, 2021, as compared to other expense of $1.5 million the same period in fiscal 2020. The increase was primarily due to favorable foreign exchange transaction adjustments in the current year.

~~Interest Expense~~

Interest expense for the six months ended August 31, 2021 decreased $1.7 million, or 32.4%, to $3.5 million, as compared to $5.1 million for the respective prior 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 23.3% for the six months ended August 31, 2021, as compared to 54.9% for the respective prior year comparable period.~~quarter. The decrease in the effective tax rate was primarily attributable to ~~the impact of the restructuring and impairment charges recognized in fiscal 2021 on book income. The Company~~unfavorable adjustments recorded ~~discrete items in the second quarter of the prior year and the current year; however, since book income was significantly lower~~ in the prior year ~~the effective tax rate was impacted more significantly by the discrete items, as well as~~quarter, related to uncertain tax ~~positions that were recorded in the first quarter of fiscal year 2021.~~positions.

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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 (in thousands):


		Six Months Ended August 31,					Three Months Ended May 31,
		2021		2020			2022		2021
Net cash provided by operating activities	Net cash provided by operating activities	$	37,758	$	32,166	Net cash provided by operating activities	$	23,314	$	11,060
Net cash used in investing activities	Net cash used in investing activities	(10,562)		(10,531)		Net cash used in investing activities	(1,306,289)		(7,466)
Net cash used in financing activities		(26,348)		(45,131)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	1,368,940		(5,610)
Working Capital	Working Capital	210,048		189,642		Working Capital	385,983		236,002

Net cash provided by operating activities for the ~~six months ended August 31, 2021~~current quarter was ~~$37.8~~$23.3 million, compared to ~~$32.2~~$11.1 million for the prior year quarter. The increase in cash provided by operating activities ~~for the current quarter~~ is primarily attributable to ~~increased net income, which was impacted by $18.7 million of impairment and restructuring charges in the prior year-to-date period, as well as~~ increases in working capital from higher quarter-end accounts payable ~~and accrued expenses. These~~primarily offsetting increases ~~were partially offset by decreases~~ in ~~working capital from~~ accounts receivable, inventories, and prepaid ~~assets and contract assets and liabilities.~~assets.

Net cash used in investing activities for the ~~six months ended August 31, 2021~~current quarter was ~~$10.6 million,~~$1.3 billion, compared to ~~$10.5~~$7.5 million for the prior year quarter. The increase in cash used ~~for~~in investing activities for the current quarter was ~~primarily~~ attributable to ~~decreased capital expenditures, partially offset by~~ the ~~sale of our Galvabar business~~Precoat Acquisition completed in the ~~prior year.~~current quarter.

Net cash provided by financing activities for the current quarter was $1.4 billion, compared to net cash used in financing activities ~~for the six months ended August 31, 2021 was $26.3 million, compared to $45.1~~of $5.6 million for the prior year quarter. The ~~decrease~~increase in cash used in financing activities during the current quarter was primarily attributable to an increase in ~~net draws on our credit facility, partially offset by an increase in~~proceeds from long-term debt. ~~repurchases of shares of Company common stock.~~ See ~~“Share Repurchases” sections~~“Financing and Capital” section below for additional information.

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Financing and Capital

2021 Credit Agreement

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 quarter end.

~~The proceeds of~~On May 13, 2022, the ~~loans~~Revolving Credit Facility under the 2021 Credit Agreement ~~are used~~was repaid with proceeds from the 2022 Credit Agreement, which is further described below.

2022 Credit Agreement and Term Loan B

On May 13, 2022, the Company replaced its 2021 Credit Agreement with a new Credit Agreement (the "2022 Credit Agreement") by and among the Company, borrower, Citibank, N.A., as administrative and collateral agent, and the other agents and lender parties thereto the 2022 Credit Agreement. The 2022 Credit Agreement includes the following significant terms;

ii.provides for a senior secured revolving credit facility in the aggregate principal amount of $400.0 million (the "Revolving Credit Facility"), due May 13, 2027;

iii.includes a letter of credit sub-facility of up to $100.0 million, which is part of, and not in addition to, the Revolving Credit Facility;

iv.borrowings under the Term Loan B and the Revolving Credit Facility each bear an interest rate of Secured Overnight Financing Rate ("SOFR") plus 4.25%;

vi.includes a maximum quarterly leverage ratio financial covenant and an interest coverage ratio financial covenant,

The proceeds of the advances under the Revolving Credit Facility will be utilized primarily to finance working capital needs, capital improvements, dividends, ~~future~~ acquisitions and for general corporate purposes. The proceeds of the Term Loan B were used to finance a portion of the Precoat Acquisition, pay transaction-related costs owed under the Securities Purchase Agreement (defined below) and refinance certain prior indebtedness, including the repayment of outstanding borrowings under the 2021 Credit Agreement. The proceeds were utilized to redeem 100% of the Company’s 2020 Senior Notes on June 6, 2022.

The effective interest rate for the 2022 Credit Facility and the Term Loan B was 4.91% at May 31, 2022.

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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Convertible Subordinated Notes

The Company used the proceeds of the Convertible Notes to fund the Company’s Precoat Acquisition.

The Company's debt agreements requires the Company to maintain certain affirmative and negative covenants. As of ~~August~~May 31, ~~2021, we had $183.0 million of floating- and fixed-rate notes outstanding with varying maturities through fiscal 2032 and we were~~2022, the Company was in compliance with all ofcovenants and other requirements set forth in the ~~covenants related to these outstanding borrowings. As of August 31, 2021, we had approximately $357.1 million of additional credit available for future draws or letters of credit.~~debt agreements.

Share Repurchase Program

During the ~~six~~three months ended ~~August~~May 31, ~~2021,~~2022, the Company ~~repurchased 416,279~~did not purchase any shares of ~~its~~ common ~~shares in the amount of $21.2 million at an average purchase price of $51.01~~stock under the 2020 Share Authorization. The Company has $84.0 million that may be used to purchase shares. 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~~all three of our ~~business,~~operating segments, primarily copper, aluminum, steel and nickel-based alloys in the Infrastructure Solutions segment, ~~and~~ zinc, ~~and~~ natural gas in the Metal Coatings segment, and natural gas, steel and aluminum in the Precoat Metals segment. We attempt to minimize these increases through escalation clauses in customer contracts for copper, aluminum, steel and nickel-based alloys, when market conditions allow and through fixed cost contract purchases on ~~zinc.~~zinc and natural gas. 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 ~~August~~May 31, ~~2021,~~2022, 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 ~~August~~May 31, ~~2021,~~2022, we had outstanding letters of credit in the amount of ~~$25.3~~$28.9 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.~~periods, the bulk of the issued letters of credit are associated with our Infrastructure Solutions segment.

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~~Except as noted below, during the ~~six months ended August 31, 2021,~~current quarter, 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 and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended February 28, ~~2021.~~2022.

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Environmental Remediation Liabilities

The Company assumed certain environmental liabilities as part of the Precoat Acquisition. The Company's accounting policy for the recognition of environmental liabilities requires significant judgements and estimates by management and may be impacted by changing regulations and approaches to remediation plans. Any revisions to these estimates could have a material impact on the Company's financial condition or results of operations.

Environmental remediation liabilities include costs directly associated with site investigation and clean up, such as materials, external contractor costs, legal and consulting expenses and incremental internal costs directly related to the remedy. Estimates used to record environmental remediation liabilities are based on the Company's best estimate of probable future costs based on site-specific facts and circumstances known at the time of the estimate and these estimates are updated on a quarterly basis. Estimates of the cost for the likely remedy are developed using internal resources or by third-party environmental engineers or other service providers. The Company records the environmental remediation liabilities that represent the points in the range of estimates that are most probable, or the minimum amount when no amount within the range is a better estimate than any other amount.

Business Combinations

Assets acquired and liabilities assumed as part of a business acquisition are generally recorded at their fair value at the date of acquisition. The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired also requires management to utilize assumptions and estimates, which are based upon available information that may be subject to further refinement over the purchase accounting period of one year.

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~~we 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~~when comparing operating results across a broad spectrum of companies, which provides a more complete understanding of ~~the Company’s~~our 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~~our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP.

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 six months ended August 31, 2021, the Company did not recognize any restructuring and impairment charges. The following tables ~~provides~~provide a reconciliation for the three ~~and six~~ months ended ~~August~~May 31, ~~2020~~2022 and 2021 between the various measures calculated in accordance with GAAP to the Adjusted Earnings Measures (in thousands, except per share data):

Three Months Ended August 31, Six Months Ended August 31,
2021 2020 2021 2020
Operating income 26,528 $ 652 57,240 $ 14,969
Restructuring and impairment charges — 18,693 — 18,693
Adjusted operating income $ 26,528 $ 19,345 $ 57,240 $ 33,662

Three Months Ended Six Months Ended
August 31, 2020 August 31, 2020
Amount Per
Diluted Share Amount Per
Diluted Share
Net income (loss) and diluted earnings (loss) per share $ (1,790) $ (0.07) $ 3,751 $ 0.14
Adjustments (net of tax):
Restructuring and impairment charges:
Metal Coatings 11,324 0.43 11,324 0.43
Infrastructure Solutions 7,369 0.28 7,369 0.28
Subtotal 18,693 0.71 18,693 0.71
Tax benefit related to restructuring and impairment charges (3,930) (0.15) (3,930) (0.15)
Total adjustments 14,763 0.56 14,763 0.56
Adjusted earnings and adjusted earnings per share $ 12,973 $ 0.50 $ 18,514 $ 0.71
(1) Earnings per share amounts included in the table above may not sum due to rounding differences.


	Three Months Ended
	May 31, 2022
	Amount		Per Diluted Share(1)
Net income and diluted earnings per share	$	24,077
Impact of after-tax interest expense for Convertible Notes	547
Net income for diluted earnings per share	$	24,624	$	0.96
Adjustments:




Acquisition and transaction related expenditures(2)	12,614		0.49
Increase in interest expense due to Precoat Acquisition	5,776		0.22
Depreciation and amortization - Precoat Metals	3,181		0.12
Precoat Metals segment contribution	(6,666)		(0.26)
Subtotal	14,905		0.58
Tax benefit(3)	(3,577)		(0.14)
Total adjustments	11,328		0.44
Adjusted earnings and adjusted earnings per share	$	35,952	$	1.40

(1) Earnings per share amounts included in the table above may not sum due to rounding differences.
(2) Includes expenses related to the Precoat acquisition as well as the divestiture of the Infrastructure Solutions business.
(3) Tax benefit consists of 21% federal statutory rate and 3% blended state tax rate.

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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 ~~six~~three months ended ~~August~~May 31, ~~2021.~~2022. 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.~~2022.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

During the three months ended May 31, 2022, the Company closed the Precoat Acquisition, as discussed in Note 2 in the accompanying notes to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. As such, the scope of its assessment of the effectiveness of our disclosure controls and procedures did not include internal controls over financial reporting at Precoat Metals. Precoat Metals' assets and revenues represented approximately 55.3% of the Company's total assets and 13.9% of its total revenues as of and for the three months ended May 31, 2022. This exclusion is consistent with the Securities and Exchange Commission (the “SEC”) staff's guidance that an assessment of a recently acquired business may be omitted from the scope of our assessment of the effectiveness of disclosure controls and procedures that are also part of internal controls over financial reporting in the year of acquisition.

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~~Company 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~~On May 13, 2022, the Company completed its previously announced acquisition of the Precoat Metals business division of Sequa Corporation. During the first quarter of 2022, management commenced an evaluation of the design and operating effectiveness of internal controls over financial reporting related to the acquisition of Precoat Metals. The evaluation of changes to processes, technology systems, and other components of internal controls over financial reporting related to the acquisition of the Precoat Metals business division is ongoing. This process may result in additions or changes to our internal controls over financial reporting.

Except for the changes made in connection with the Precoat Acquisition, there have been no significant changes in the Company's internal ~~control~~controls over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, its internal ~~control~~controls over financial reporting.

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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.

~~Except as described below, there~~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”) is currently drafting an emergency regulation to carry out this mandate.~~

~~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.

2022.

~~Table of~~ ~~Contents~~

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~~Company did not purchase any shares of common stock ofunder the ~~Company made~~2020 Share Authorization during the ~~six~~three months ended ~~August~~May 31, ~~2021, by the~~2022. The Company ~~or any "affiliated purchaser" as defined in Rule 10b-18(a)(3) under the Exchange act:~~

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
Beginning balance, February 28, 2021 $ 84,002,349
March 1 through March 31 60,649 $ 49.47 60,649 81,002,123
April 1 through April 30 56,043 49.82 56,043 78,209,907
May 1 through May 31 9,078 51.92 9,078 77,738,544
June 1 through June 30 102,227 51.49 102,227 72,475,385
July 1 through July 30 148,452 51.56 148,452 64,821,609
August 1 through August 31 39,830 51.52 39,830 62,769,454
Total 416,279 $ 51.01 416,279 $ 62,769,454
has $84.0 million that may be used to purchase shares.

Item 5.Other Information.

~~Amendment to Corporate Bylaws~~

~~On October 8, 2021, the Board of Directors of AZZ approved an amendment and restatement of AZZ’s current Bylaws, which changes were effective immediately upon approval.The amendments include, without limitation, the following:~~

•~~clarifying that the only matters to be considered at any special meeting of shareholders called by the Chairman, the President or the Board are those specified in in the notice of meeting;~~

•~~removing the limitation on the Board’s ability to fill a vacancy resulting from an increase in the number of directors constituting the whole Board;~~

•~~updating the advance notice provisions for director nominations and stockholder proposals;~~

•~~designating the district courts of the State of Texas in Tarrant County as the sole and exclusive forum for shareholder claims and director and officer indemnification claims; and~~

•designating the U.S. federal district court in Tarrant County, Texas (or if such court lacks jurisdiction or proper venue, any other U.S. federal district court) as the sole and exclusive forum for claims under the U.S. Securities Act of 1933, as amended, or the U.S. Securities Exchange Act of 1934, as amended, or any other federal securities law.

The foregoing summary of the amendment and restatement of the Company’s Bylaws is qualified in its entirety by reference to the full text of the Bylaws, a copy of which is attached to this Quarterly Report on Form 10-Q as Exhibit 3.2 and is incorporated herein by reference.

~~Table of~~ ~~Contents~~

~~Executive Officer Severance Plan~~

~~On and effective as of October 8, 2021, the Board of Directors of the Company adopted and approved the AZZ Inc.~~

Executive Officer Severance Plan (the “Executive Officer Severance Plan”), for executive officers of the Company who are selected for participation and whom are not covered by an employment agreement with the Company for severance pay and/or benefits for a termination under the same circumstances.

The Executive Officer Severance Plan provides for the payment of severance pay and benefits to eligible officers in the event of a termination of employment with the Company without cause or for good reason, each as defined in the Executive Officer Severance Plan (each a “Qualifying Termination”). In the event of an eligible officer’s Qualifying Termination and subject to the officer’s execution of a general release of claims against the Company, the Executive Officer Severance Plan provides for the severance pay and benefits as described below.

In addition to payment of amounts earned or receivable but unpaid, if the Qualified Termination is not in connection with a change in control (as described below), the severance pay and benefits are as follows:

•a lump sum equal to the eligible officer’s annual cash bonus for the fiscal year of the Company in which the Qualified Termination occurs, determined as if performance was at target for such year (“Target Cash Bonus”), and prorated for the number of days during such year the eligible officer was employed;

•~~continued payment of the eligible officer’s total of annual base salary and Target Cash Bonus for 18 months, commencing 60 days after the termination date;~~

•~~full vesting of the eligible officer’s outstanding time-based equity awards; and~~

•to the extent COBRA continuation coverage is elected for the eligible employee, his/her spouse and/or dependent children under the Company’s group health plan, the eligible officer will pay COBRA premiums equal to the amount a similarly-situated active officer would pay for the same coverage, and the Company will pay the remainder of the COBRA premium for up to 18 months.

If the Qualified Termination is in connection with a change in control (i.e., if the Qualified Termination occurs during the period (i) commencing upon the execution of a written agreement that, if consummated, would result in a change in control, and (ii) ending on the earlier of (A) the termination of such agreement, or (B) 24 months following the consummation of the change in control), the severance pay and benefits are the same as described above with the following modifications:

•~~continued payment of the eligible officer’s total of annual base salary and Target Cash Bonus for 24 months (instead of 18 months); and~~

•to the extent COBRA continuation coverage is elected for the eligible employee, his/her spouse and/or dependent children under the Company’s group health plan, the Company will pay up to 24 months of the full amount of the COBRA premium (or for months 19 to 24, the premium for COBRA-like or equivalent coverage, as applicable).

The Executive Officer Severance Plan does not provide for a gross-up to any of the executive officers to offset any excise taxes that may be imposed on excess parachute payments under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Excise Tax”). Instead, in the event the severance pay and benefits in connection with a change in control would, if paid, be subject to the Excise Tax, then the eligible officer would receive the amount that provides the greater net, after income tax amount between (i) the full amount of severance pay and benefits, calculated for this comparison after reduction by the Excise Tax, or (ii) the amount of severance pay and benefits reduced so that no Excise Tax will apply.

For purposes of the Executive Officer Severance Plan, “change in control” means (i) a sale of substantially all of the Company’s assets; (ii) a merger or consolidation in which the Company is not the surviving entity, and Company shareholders own less than 50 percent of the voting power of the surviving entity; (iii) a reverse merger in which the Company is the surviving entity, but the Company’s shareholders own less than 50 percent of the voting power of the surviving entity, or (iv) an acquisition by any person (other than a benefit plan or trust sponsored by the Company) of the beneficial ownership of equity securities of the Company representing over 50 percent of the combined voting power entitled to vote in the election of directors.

The foregoing description of the Executive Officer Severance Plan does not purport to be complete and is subject to and qualified in its entirety by reference to the Executive Officer Severance Plan, a copy of which is attached hereto as Exhibit 10.7, the terms of which are incorporated herein by reference.None.

Table of Contents

Item 6. Exhibits


2.1**						Securities Purchase Agreement dated as of March 7, 2022 by and between Sequa Corporation and AZZ Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by the Registrant on March 8, 2022).

2.2						First Amendment to Securities Purchase Agreement, dated as of May 6, 2022, by and between Sequa Corporation and AZZ Inc. (incorporated by reference to Exhibit 2.1 the Current Report on Form 8-K filed by the Registrant on May 9, 2022).

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. ~~Filed Herewith.~~(incorporated by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q filed by the Registrant on October 12, 2021).

10.1*4.1						Indenture, dated as of May 13, 2022, by and between AZZ Inc. ~~2018 Employee Stock Purchase Plan~~and UMB Bank, N.A. (incorporated by reference to ~~Appendix A~~Exhibit 4.1 to the ~~Registrant's Definitive Proxy Statement~~Current Report on Form ~~DEFA~~8-K filed by the Registrant on May ~~25, 2018.)~~16, 2022).

~~10.2~~10.1**						~~Note Purchase~~Credit Agreement, dated as of ~~January 20, 2011,~~May 13, 2022, by and among AZZ ~~incorporated~~Inc., the Guarantors, the Lenders, the L/C Issuers and ~~the purchasers identified therein~~Citibank, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on ~~January 21, 2011)~~May 16, 2022).

~~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~~ ~~(incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed by the Registrant on July 9, 2021).~~

10.410.2*						~~AZZ incorporated 2014 Long Term Incentive Plan~~ ~~(incorporated~~Securities Purchase Agreement, dated as of May 13,2022, by ~~reference to Appendix A to the Registrant’s Definitive Proxy Statement on Form DEFA filed May 29, 2014).~~

10.5*						~~First Amendment to~~and between AZZ Inc. ~~2014 Long Term Incentive Plan~~and BTO Pegasus Holdings DE L.P. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Registrant on ~~January 21, 2016.~~May 16, 2022).

~~10.6~~10.3						~~Note Purchase~~Registration Rights Agreement, dated as of ~~October 9, 2020,~~May 13, 2022, by and ~~among~~between AZZ Inc. and ~~the purchasers identified therein~~BTO Pegasus Holdings DE L.P. (incorporated by reference to Exhibit ~~10.6~~10.3 to the ~~Quarterly~~Current Report on Form ~~10-Q~~8-K filed by the Registrant on ~~October 13, 2020).~~ May 16, 2022)
10.7*						~~AZZ Inc. Executive Officer Severance Plan. Filed Herewith.~~
~~31.1~~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~~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~~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~~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~~101.INS+						Inline 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~~101.SCH+						Inline XBRL Taxonomy Extension Schema Document

~~101.CAL~~101.CAL+						Inline XBRL Taxonomy Extension Calculation Linkbase Document


~~101.DEF~~101.DEF+						Inline XBRL Taxonomy Extension Definition Linkbase Document

~~101.LAB~~101.LAB+						Inline XBRL Taxonomy Extension Label Linkbase Document

~~101.PRE~~101.PRE+						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104+						Cover Page Interactive Date File (embedded with the Inline XBRL document).

** ~~Management contract, compensatory plan or arrangement~~Some schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission.The Company may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules and exhibits so furnished.

+ Filed herewith

++ Furnished herewith

Table of Contents

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:

~~October 12, 2021~~July 11, 2022

By:

/s/ Philip A. Schlom

Philip A. Schlom
Chief Financial Officer


		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	1921
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2729
Item 4.	Controls and Procedures	2729

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	2830
Item 1A.	Risk Factors	2830
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2830
Item 5	Other Information	2830
Item 6.	Exhibits	31

	SIGNATURES	32


	Three Months Ended				Six Months Ended
	August 31, 2020				August 31, 2020
	Amount		Per Diluted Share		Amount		Per Diluted Share
Net income (loss) and diluted earnings (loss) per share	$	(1,790)	$	(0.07)	$	3,751	$	0.14
Adjustments (net of tax):
Restructuring and impairment charges:
Metal Coatings	11,324		0.43		11,324		0.43
Infrastructure Solutions	7,369		0.28		7,369		0.28
Subtotal	18,693		0.71		18,693		0.71
Tax benefit related to restructuring and impairment charges	(3,930)		(0.15)		(3,930)		(0.15)
Total adjustments	14,763		0.56		14,763		0.56
Adjusted earnings and adjusted earnings per share	$	12,973	$	0.50	$	18,514	$	0.71

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


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
Beginning balance, February 28, 2021					$	84,002,349
March 1 through March 31	60,649	$	49.47	60,649	81,002,123
April 1 through April 30	56,043	49.82		56,043	78,209,907
May 1 through May 31	9,078	51.92		9,078	77,738,544
June 1 through June 30	102,227	51.49		102,227	72,475,385
July 1 through July 30	148,452	51.56		148,452	64,821,609
August 1 through August 31	39,830	51.52		39,830	62,769,454



Total	416,279	$	51.01	416,279	$	62,769,454