AZZ (AZZ) 10-Q 3 Oct 17 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	6 Months Ended
	Aug. 31, 2017shares
Document and Entity Information [Abstract]
Entity Registrant Name	AZZ INC
Entity Central Index Key	8,947
Document Type	10-Q
Document Period End Date	Aug. 31, 2017
Amendment Flag	false
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--02-28
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding	25,961,323

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Aug. 31, 2017	Feb. 28, 2017
Current Assets:
Cash and Cash Equivalents	$ 3,549	$ 11,302
Accounts receivable (net of allowance for doubtful accounts of $391 as of August 31, 2017 and $347 as of February 28, 2017)	138,544	138,470
Inventories:
Raw Material	89,138	80,169
Work-In-Process	48,129	36,033
Finished Goods	6,741	7,006
Costs and Estimated Earnings In Excess of Billings On Uncompleted Contracts	32,082	20,546
Deferred Income Taxes		249
Prepaid Expenses and Other	6,824	2,762
Total Current Assets	325,007	296,537
Deferred Tax Assets, Net, Noncurrent	215	0
Property, Plant and Equipment, Net	230,314	228,610
Goodwill	310,032	306,579
Intangibles and Other Assets, Net	145,833	146,113
Total Assets	1,011,401	977,839
Current Liabilities:
Accounts Payable	43,698	49,816
Income Tax Payables	1,357	778
Accrued Salaries and Wages	14,188	23,429
Other Accrued Liabilities	20,085	18,390
Customer Advance Payment	25,951	20,860
Long Term Debt Due Within One Year	14,286	16,629
Billings In Excess of Costs and Estimated Earnings On Uncompleted Contracts	6,708	11,948
Total Current Liabilities	126,273	141,850
Long-Term Debt Due After One Year	287,522	254,800
Deferred Income Taxes	52,293	51,550
Liabilities	466,088	448,200
Shareholders' Equity:
Common stock, $1 par, shares authorized 100,000; 25,961 shares issued and outstanding at August 31, 2017 and 25,964 shares issued and outstanding at February 28, 2017	25,961	25,964
Capital In Excess of Par Value	36,391	37,739
Retained Earnings	507,754	495,030
Accumulated Other Comprehensive Income	(24,793)	(29,094)
Total Shareholders' Equity	545,313	529,639
Total Liabilities and Shareholders' Equity	$ 1,011,401	$ 977,839

Condensed consolidated Balance3

Condensed consolidated Balance Sheets (Parenthetical) - USD ($)	Aug. 31, 2017	Feb. 28, 2017
Statement of Financial Position [Abstract]
Accounts Receivable, Allowance for Doubtful Accounts	$ 391,332	$ 347,349
Common Stock, Par Value (usd per share)	$ 1	$ 1
Common Stock, Shares Authorized (shares)	100,000,000	100,000,000
Common Stock, Shares Issued (shares)	25,961,323	25,963,679
Common Stock, Shares, Outstanding	25,961,323	25,963,679

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016	Aug. 31, 2017	Aug. 31, 2016
Income Statement [Abstract]
Net Sales	$ 190,407	$ 195,045	$ 398,958	$ 437,712
Costs and Expenses
Cost of Sales	148,938	153,159	308,223	332,499
Gross Profit	41,469	41,886	90,735	105,213
Selling, General and Administrative	26,413	26,997	53,772	55,816
Operating Income (Loss)	15,056	14,889	36,963	49,397
Interest Expense	3,400	3,580	6,760	7,505
Gain (Loss) on Disposition of Property Plant Equipment	(654)	(192)	(554)	(82)
Other Expense (Income) - net	(394)	(68)	(479)	(190)
Income Before Income Taxes	11,396	11,185	30,128	42,000
Income Tax Expense	3,067	1,162	8,559	10,914
Net Income	$ 8,329	$ 10,023	$ 21,569	$ 31,086
Earnings Per Common Share
Basic Earnings Per Share (usd per share)	$ 0.32	$ 0.39	$ 0.83	$ 1.20
Diluted Earnings Per Share (usd per share)	$ 0.32	$ 0.38	$ 0.83	$ 1.19

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016	Aug. 31, 2017	Aug. 31, 2016
Statement of Comprehensive Income [Abstract]
Net Income	$ 8,329	$ 10,023	$ 21,569	$ 31,086
Other Comprehensive Income (Loss):
Unrealized Translation Gains (Losses)	5,326	205	4,328	2,683
Interest rate swap, net of income tax of $7, $7, $15, and $15, respectively.	(14)	(14)	(27)	(27)
Other Comprehensive Income (Loss)	5,312	191	4,301	2,656
Comprehensive Income	$ 13,641	$ 10,214	$ 25,870	$ 33,742

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016	Aug. 31, 2017	Aug. 31, 2016
Statement of Comprehensive Income [Abstract]
Interest rate swap, income tax	$ 7	$ 7	$ 15	$ 15

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016
Cash Flows From Operating Activities:
Net Income	$ 21,569	$ 31,086
Adjustments To Reconcile Net Income To Net Cash Provided By Operating Activities:
Provision For Doubtful Accounts	47	11
Amortization and Depreciation	24,984	25,370
Deferred Income Tax Expense	682	1,509
Property, Plant and Equipment, Disposals	0	6,706
Net Loss (Gain) On Insurance Settlement or On Sale of Property, Plant & Equipment	554	82
Amortization of Deferred Borrowing Costs	303	639
Share Based Compensation Expense	3,400	3,198
Effects of Changes In Assets & Liabilities:
Accounts Receivable	939	(3,247)
Inventories	(19,658)	(15,832)
Prepaid Expenses and Other	(4,021)	(3,040)
Other Assets	(1,106)	141
Net Change In Billings Related To Costs and Estimated Earnings On Uncompleted Contracts	(16,487)	8,028
Accounts Payable	(6,770)	1,656
Other Accrued Liabilities and Income Taxes Payable	(1,651)	(6,279)
Net Cash Provided By Operating Activities	2,785	50,028
Cash Flows Used For Investing Activities:
Proceeds From Sale Or Insurance Settlement of Property, Plant, and Equipment	177	320
Purchase of Property, Plant and Equipment	(16,636)	(19,760)
Acquisition of Subsidiaries, Net of Cash Acquired	(10,250)	(22,679)
Net Cash From Investing Activities	(26,709)	(42,119)
Cash Flows From Financing Activities:
Proceeds from revolving loan	209,000	86,000
Payments on revolving loan	(115,500)	(92,000)
Payments on Long Term Debt	(63,504)	(18,505)
Payments for Repurchase of Common Stock	(5,185)	0
Payments of Dividends	(8,845)	(7,787)
Net Cash Used In Financing Activities	15,966	(32,292)
Effect of Exchange Rate Changes on Cash	205	106
Net Increase (Decrease) In Cash & Cash Equivalents	(7,753)	(24,277)
Cash & Cash Equivalents At Beginning of Period	11,302	40,191
Cash & Cash Equivalents At End of Period	3,549	15,914
Supplemental Disclosures
Cash Paid For Interest	7,020	7,230
Cash Paid For Income Taxes	$ 7,605	$ 9,764

Consolidated Statement of Share

Consolidated Statement of Shareholders' Equity (Unaudited) - 6 months ended Aug. 31, 2017 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Balance at Feb. 28, 2017	$ 529,639	$ 25,964	$ 37,739	$ 495,030	$ (29,094)
Balance (shares) at Feb. 28, 2017		25,964
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Compensation (shares)		16
Stock Compensation	3,400	$ 16	3,384
Restricted Stock Units (shares)		42
Restricted Stock Units	(1,198)	$ 42	(1,240)
Stock Issued for Stock Appreciation Rights Shares		1
Stock Issued For Stock Appreciation Rights	0	$ 1	(1)
Employee Stock Purchase Plan (shares)		35
Employee Stock Purchase Plan	1,632	$ 35	1,597
Treasury Stock, Shares, Retired		(97)
Treasury Stock, Retired, Par Value Method, Amount	(5,185)	$ 97	5,088
Cash Dividend Paid	(8,845)			(8,845)
Net Income	21,569
Foreign Currency Translation	4,328				4,328
Interest rate swap, net of $15 income tax	(27)				(27)
Balance at Aug. 31, 2017	$ 545,313	$ 25,961	$ 36,391	$ 507,754	$ (24,793)
Balance (shares) at Aug. 31, 2017		25,961

Consolidated Statement of Shar9

Consolidated Statement of Shareholders' Equity (Parenthetical) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016	Aug. 31, 2017	Aug. 31, 2016
Statement of Stockholders' Equity [Abstract]
Interest rate swap, income tax	$ 7	$ 7	$ 15	$ 15

Basis of Presentation

Basis of Presentation	6 Months Ended
	Aug. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	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. We are a global provider of galvanizing services, welding solutions, specialty electrical equipment and highly engineered services to the power generation, transmission, distribution, refining and industrial markets. We have two distinct operating segments: the Energy Segment and Metal Coatings Segment. AZZ Metal Coatings is a leading provider of metal finishing solutions for corrosion protection, including hot dip galvanizing to the North American steel fabrication industry. AZZ Energy 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 the energy markets worldwide. As of March 1, 2017, our Galvanizing Segment was rebranded to the Metal Coatings Segment to more closely align the description of the segment with its current offerings and served markets. There have been no changes to the underlying information reported under this operating segment for prior periods, however, the new description will be included in the operating results for future filings and include the new powder coating offerings for the current and future periods. Presentation The accompanying condensed consolidated balance sheet as of February 28, 2017 , which 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, 2017 , included in the Company’s Annual Report on Form 10-K covering such period. Our 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 ended February 28, 2018 is referred to as fiscal 2018. In the opinion of management, the accompanying unaudited 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 31, 2017 , the results of its operations for the three and six months ended August 31, 2017 and 2016 , and cash flows for the six months ended August 31, 2017 and 2016 . These interim results are not necessarily indicative of results for a full year. Accounting Standards Recently Adopted In November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.” ASU 2015-17 simplifies the presentation of deferred taxes in a classified statement of financial position and was adopted by the Company on March 1, 2017. As a result of the adoption, the Company is required to offset deferred tax liabilities and assets, as well as any related valuation allowance, and present as a single non-current amount. However, the Company shall not offset deferred tax liabilities and assets attributable to different tax-paying components of the entity or to different tax jurisdictions. The adoption was on a prospective basis and therefore had no impact on prior year. New Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, "Leases." The standard requires a lessee to recognize a liability to make lease payments and a right-of-use asset representing a right to use the underlying asset for the lease term on the balance sheet. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers", issued as a new Topic, Accounting Standards Codification (ASC) Topic 606 ("ASU 2014-09"). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The premise of the guidance is that a Company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 can be adopted by the Company either retrospectively or as a cumulative-effect adjustment as of the date of adoption. This ASU is effective for public entities for reporting periods beginning after December 15, 2017. This standard will be effective for the Company beginning in fiscal 2019. The Company is planning on adopting this standard retrospectively. We believe this standard will impact the timing of revenue recognition for contracts which contain multiple performance obligations with revenue recognized over time, however the overall impact to the prior year financial results is still under review.

Earnings Per Share

Earnings Per Share	6 Months Ended
	Aug. 31, 2017
Earnings Per Share [Abstract]
Earnings Per Share	Earnings Per Share Earnings per share is based on the weighted average number of shares outstanding during each period, adjusted for the dilutive effect of stock awards. The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended August 31, Six Months Ended August 31, 2017 2016 2017 2016 (Unaudited) (In thousands except per share data) Numerator: Net income for basic and diluted earnings per common share $ 8,329 $ 10,023 $ 21,569 $ 31,086 Denominator: Denominator for basic earnings per common share–weighted average shares 25,970 25,987 25,991 25,950 Effect of dilutive securities: Employee and director stock awards 66 132 74 131 Denominator for diluted earnings per common share 26,036 26,119 26,065 26,081 Earnings per share basic and diluted: Basic earnings per common share $ 0.32 $ 0.39 $ 0.83 $ 1.20 Diluted earnings per common share $ 0.32 $ 0.38 $ 0.83 $ 1.19

Stock-based Compensation

Stock-based Compensation	6 Months Ended
	Aug. 31, 2017
Share-based Compensation [Abstract]
Stock-based Compensation	Share-based Compensation The Company has one share-based compensation plan, the 2014 Long Term Incentive Plan (the “Plan”). The purpose of the Plan is to promote the growth and prosperity of the Company by permitting the Company to grant to its employees, directors and advisors various types of restricted stock unit awards, performance share units, stock options, and stock appreciation rights to purchase common stock of the Company. The maximum number of shares that may be issued under the Plan is 1,500,000 shares. As of August 31, 2017 , the Company has approximately 1,305,632 shares available for future issuance under the Plan. Restricted Stock Unit Awards Restricted stock unit awards are valued at the market price of our common stock on the grant date. Awards issued prior to fiscal 2015 generally have a three year cliff vesting schedule and awards issued subsequent to fiscal 2015 generally vest ratably over a period of three years but these awards may vest early in accordance with the Plan’s accelerated vesting provisions. The activity of our non-vested restricted stock unit awards for the six month period ended August 31, 2017 is as follows: Restricted Stock Units Weighted Average Grant Date Fair Value Non-Vested Balance as of February 28, 2017 134,547 $ 51.10 Granted 45,613 60.00 Vested (61,361 ) 47.09 Forfeited (4,021 ) 55.50 Non-Vested Balance as of August 31, 2017 114,778 $ 56.63 Performance Share Unit Awards Performance share unit awards are valued at the market price of our common stock on the grant date. These awards have a three year performance cycle and will vest and become payable, if at all, on the third anniversary of the award date. The awards are subject to the Company’s degree of achievement of a target annual average adjusted return on assets during these three year periods. In addition, a multiplier may be applied to the total awards granted which is based on the Company’s total shareholder return during such three year period in comparison to a defined specific industry peer group as set forth in the plan. The activity of our non-vested performance share unit awards for the six month period ended August 31, 2017 is as follows: Performance Weighted Non-Vested Balance as of February 28, 2017 51,426 $ 51.70 Granted 25,634 60.20 Vested — — Forfeited (2,631 ) 27.25 Non-Vested Balance as of August 31, 2017 74,429 $ 54.53 Stock Appreciation Rights Stock appreciation rights are granted with an exercise price equal to the market value of our common stock on the date of grant. These awards generally have a contractual term of 7 years and vest ratably over a period of three years although some may vest immediately on issuance. These awards are valued using the Black-Scholes option pricing model. A summary of the Company’s stock appreciation rights activity for the six month period ended August 31, 2017 is as follows: SAR’s Weighted Average Exercise Price Outstanding as of February 28, 2017 170,139 $ 42.02 Granted — — Exercised (4,479 ) 42.54 Forfeited (2,145 ) 45.36 Outstanding as of August 31, 2017 163,515 $ 41.96 Exercisable as of August 31, 2017 153,515 $ 41.75 The average remaining contractual term for those stock appreciation rights outstanding at August 31, 2017 is 3.02 years, with an aggregate intrinsic value of $1.1 million . The average remaining contractual terms for those stock appreciation rights that are exercisable as of August 31, 2017 is 3.01 years, with an aggregate intrinsic value of $1.1 million . Employee Stock Purchase Plan The Company also has an employee stock purchase plan, which allows employees of the Company to purchase common stock of the Company through accumulated payroll deductions. Offerings under this plan have a duration of 24 months (the "offering period"). On the first day of an offering period (the “enrollment date”) the participant is granted the option to purchase shares on each exercise date at the lower of 85% of the market value of a share of our common stock on the enrollment date or the exercise date. The participant’s right to purchase common stock under the plan is restricted to no more than $25,000 per calendar year and the participant may not purchase more than 5,000 shares during any offering period. Participants may terminate their interest in a given offering or a given exercise period by withdrawing all of their accumulated payroll deductions at any time prior to the end of the offering period. The fair value of the estimated number of shares to be issued under each offering is determined using the Black-Scholes option pricing model. For the six month period ended August 31, 2017 , the Company issued 35,447 shares under the Employee Stock Purchase Plan. Share-based compensation expense and related income tax benefits related to all the plans listed above were as follows: Six months ended August 31, 2017 2016 (In thousands) (Unaudited) Compensation Expense $ 3,400 $ 3,198 Income tax benefits $ 1,088 $ 1,023 Unrecognized compensation cost related to restricted stock units, performance share unit awards, stock appreciation rights, and the employee stock purchase plan at August 31, 2017 totals $8.6 million . The Company’s policy is to issue shares required under these plans from the Company’s treasury shares or from the Company’s authorized but unissued shares.

Segments

Segments	6 Months Ended
	Aug. 31, 2017
Segment Reporting [Abstract]
Segments	Segments Information regarding operations and assets by segment was as follows: Three Months Ended August 31, Six Months Ended August 31, 2017 2016 2017 2016 (Unaudited) Net Sales: Energy $ 91,377 $ 97,601 $ 207,850 $ 235,703 Metal Coatings 99,030 97,444 191,108 202,009 Total net sales 190,407 195,045 398,958 437,712 Operating Income: Energy 32 8,195 8,627 26,948 Metal Coatings 23,409 15,032 44,651 39,334 Corporate (8,385 ) (8,338 ) (16,315 ) (16,885 ) Total operating income 15,056 14,889 36,963 49,397 Interest expense 3,400 3,580 6,760 7,505 Net loss on sale of property, plant and equipment and insurance proceeds 654 192 554 82 Other income, net (394 ) (68 ) (479 ) (190 ) Income before income taxes $ 11,396 $ 11,185 $ 30,128 $ 42,000 As of August 31, 2017 August 31, 2016 August 31, 2017 August 31, 2016 Total Assets: Energy $ 551,035 $ 543,141 $ 551,035 $ 543,141 Metal Coatings 449,228 423,587 449,228 423,587 Corporate 11,138 25,006 11,138 25,006 $ 1,011,401 $ 991,734 $ 1,011,401 $ 991,734 Financial Information About Geographical Areas Below is a breakdown of selected financial information by geographical area: Three Months Ended August 31, Six Months Ended August 31, 2017 2016 2017 2016 (Unaudited) Net Sales: U.S. $ 156,672 $ 141,038 $ 326,670 $ 295,438 International 33,839 54,163 72,393 142,970 Eliminations (104 ) (156 ) (104 ) (695 ) Total Net Sales $ 190,407 $ 195,045 $ 398,958 $ 437,712 August 31, 2017 February 28, 2017 (In thousands) (Unaudited) Property, Plant and Equipment, Net: U.S. $ 206,298 $ 205,079 Canada 18,169 18,002 Other Countries 5,847 5,529 Total Property, Plant and Equipment, Net $ 230,314 $ 228,610

Warranty Reserves

Warranty Reserves	6 Months Ended
	Aug. 31, 2017
Product Warranties Disclosures [Abstract]
Warranty Reserves	Warranty Reserves A reserve has been established to provide for the estimated future cost of warranties on a portion of the Company’s delivered products and is classified within accrued liabilities on the consolidated balance sheet. Management periodically reviews the reserves and makes adjustments accordingly. Warranties cover such factors as non-conformance to specifications and defects in material and workmanship. The following table shows changes in the warranty reserves since the end of fiscal 2017: Warranty Reserve (unaudited) (in thousands) Balance at February 28, 2017 $ 2,098 Warranty costs incurred (993 ) Additions charged to income 695 Balance at August 31, 2017 $ 1,800

DEBT (Notes)

DEBT (Notes)	6 Months Ended
	Aug. 31, 2017
Debt [Abstract]
Long-term Debt [Text Block]	Debt Our debt consisted of the following: As of August 31, 2017 February 28, 2017 (In thousands) (Unaudited) Senior Notes, due in balloon payment in January 2021 $ 125,000 $ 125,000 Senior Notes, due in annual installments of $14,286 beginning in March 2012 through March 2018 14,286 28,571 Term Note, due in quarterly installments beginning in June 2013 through March 2018 — 49,219 Revolving line of credit with bank 163,000 69,500 Total debt 302,286 272,290 Unamortized debt issuance costs for Senior Notes and Term Note (478 ) (861 ) Total debt, net 301,808 271,429 Less amount due within one year (14,286 ) (16,629 ) Debt due after one year, net $ 287,522 $ 254,800 On March 21, 2017, we executed the Amended and Restated Credit Agreement (the “2017 Credit Agreement”) with Bank of America and other lenders. The 2017 Credit Agreement amended the Credit Agreement entered into on March 27, 2013 by the following: (i) extending the maturity date until March 21, 2022, (ii) providing for a senior revolving credit facility in a principal amount of up to $450 million, with an additional $150 million accordion, (iii) including a $75 million sublimit for the issuance of standby and commercial letters of credit, (iv) including a $30 million sublimit for swing line loans, (v) restricting indebtedness incurred in respect of capital leases, synthetic lease obligations and purchase money obligations not to exceed $20 million, (vi) restricting investments in any foreign subsidiaries not to exceed $50 million in the aggregate, and (vii) including various financial covenants and certain restricted payments relating to dividends and share repurchases as specifically set forth in the 2017 Credit Agreement. The balance due on the $75.0 million term facility under the previous Credit Agreement was paid in full as a result of the execution of the 2017 Credit Agreement. The financial covenants, as defined in the 2017 Credit Agreement, require us to maintain on a consolidated basis a Leverage Ratio not to exceed 3.25:1.0 and an Interest Coverage Ratio of at least 3.00:1.0. The 2017 Credit Agreement will be used to finance working capital needs, capital improvements, dividends, future acquisitions, letter of credit needs and share repurchases. Interest rates for borrowings under the 2017 Credit Agreement are based on either a Eurodollar Rate or a Base Rate plus a margin ranging from 0.875% to 1.875% depending on our Leverage Ratio (as defined in the 2017 Credit Agreement). The Eurodollar Rate is defined as LIBOR for a term equivalent to the borrowing term (or other similar interbank rates if LIBOR is unavailable). The Base Rate is defined as the highest of the applicable Fed Funds rate plus 0.50%, the Prime rate, or the Eurodollar Rate plus 1.0% at the time of borrowing. The 2017 Credit Agreement also carries a Commitment Fee for the unfunded portion ranging from 0.175% to 0.30% per annum, depending on our Leverage Ratio.

Subsequent Events (Notes)

Subsequent Events (Notes)	6 Months Ended
	Aug. 31, 2017
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events On September 6, 2017, we completed the acquisition of all the assets and outsanding shares of Powergrid Solutions, Inc. ("PSI"), a privately held company, based in Oshkosh, Wisconsin. PSI designs, engineers and manufactures customized low and medium-voltage power quality, power generation and distribution equipment. PSI’s product portfolio includes metal-enclosed, metal-clad and padmount switchgear, serving the utility, commercial, industrial and renewable energy markets since 1982. The acquisition of PSI is a key addition to our electrical switchgear portfolio. The addition of PSI’s low-voltage and padmount switchgear allows AZZ to offer a comprehensive portfolio of customized switchgear solutions to both existing and new customers in a diverse set of industries.

Earnings Per Share (Tables)

Earnings Per Share (Tables)	6 Months Ended
	Aug. 31, 2017
Earnings Per Share [Abstract]
Computation of basic and diluted earnings per share	The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended August 31, Six Months Ended August 31, 2017 2016 2017 2016 (Unaudited) (In thousands except per share data) Numerator: Net income for basic and diluted earnings per common share $ 8,329 $ 10,023 $ 21,569 $ 31,086 Denominator: Denominator for basic earnings per common share–weighted average shares 25,970 25,987 25,991 25,950 Effect of dilutive securities: Employee and director stock awards 66 132 74 131 Denominator for diluted earnings per common share 26,036 26,119 26,065 26,081 Earnings per share basic and diluted: Basic earnings per common share $ 0.32 $ 0.39 $ 0.83 $ 1.20 Diluted earnings per common share $ 0.32 $ 0.38 $ 0.83 $ 1.19

Stock-based Compensation (Table

Stock-based Compensation (Tables)	6 Months Ended
	Aug. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation, Performance Shares Award Unvested Activity [Table Text Block]	The activity of our non-vested performance share unit awards for the six month period ended August 31, 2017 is as follows: Performance Weighted Non-Vested Balance as of February 28, 2017 51,426 $ 51.70 Granted 25,634 60.20 Vested — — Forfeited (2,631 ) 27.25 Non-Vested Balance as of August 31, 2017 74,429 $ 54.53
Restricted Stock Unit Awards Non-Vested	The activity of our non-vested restricted stock unit awards for the six month period ended August 31, 2017 is as follows: Restricted Stock Units Weighted Average Grant Date Fair Value Non-Vested Balance as of February 28, 2017 134,547 $ 51.10 Granted 45,613 60.00 Vested (61,361 ) 47.09 Forfeited (4,021 ) 55.50 Non-Vested Balance as of August 31, 2017 114,778 $ 56.63
Stock Appreciation Rights and Option Awards	A summary of the Company’s stock appreciation rights activity for the six month period ended August 31, 2017 is as follows: SAR’s Weighted Average Exercise Price Outstanding as of February 28, 2017 170,139 $ 42.02 Granted — — Exercised (4,479 ) 42.54 Forfeited (2,145 ) 45.36 Outstanding as of August 31, 2017 163,515 $ 41.96 Exercisable as of August 31, 2017 153,515 $ 41.75
Share-based compensation expense and related income tax	Share-based compensation expense and related income tax benefits related to all the plans listed above were as follows: Six months ended August 31, 2017 2016 (In thousands) (Unaudited) Compensation Expense $ 3,400 $ 3,198 Income tax benefits $ 1,088 $ 1,023

Warranty Reserves (Tables)

Warranty Reserves (Tables)	6 Months Ended
	Aug. 31, 2017
Product Warranties Disclosures [Abstract]
Changes in the warranty reserves	The following table shows changes in the warranty reserves since the end of fiscal 2017: Warranty Reserve (unaudited) (in thousands) Balance at February 28, 2017 $ 2,098 Warranty costs incurred (993 ) Additions charged to income 695 Balance at August 31, 2017 $ 1,800

DEBT (Tables)

DEBT (Tables)	6 Months Ended
	Aug. 31, 2017
Debt [Abstract]
Schedule of Debt [Table Text Block]	Our debt consisted of the following: As of August 31, 2017 February 28, 2017 (In thousands) (Unaudited) Senior Notes, due in balloon payment in January 2021 $ 125,000 $ 125,000 Senior Notes, due in annual installments of $14,286 beginning in March 2012 through March 2018 14,286 28,571 Term Note, due in quarterly installments beginning in June 2013 through March 2018 — 49,219 Revolving line of credit with bank 163,000 69,500 Total debt 302,286 272,290 Unamortized debt issuance costs for Senior Notes and Term Note (478 ) (861 ) Total debt, net 301,808 271,429 Less amount due within one year (14,286 ) (16,629 ) Debt due after one year, net $ 287,522 $ 254,800 On March 21, 2017, we executed the Amended and Restated Credit Agreement (the “2017 Credit Agreement”) with Bank of America and other lenders. The 2017 Credit Agreement amended the Credit Agreement entered into on March 27, 2013 by the following: (i) extending the maturity date until March 21, 2022, (ii) providing for a senior revolving credit facility in a principal amount of up to $450 million, with an additional $150 million accordion, (iii) including a $75 million sublimit for the issuance of standby and commercial letters of credit, (iv) including a $30 million sublimit for swing line loans, (v) restricting indebtedness incurred in respect of capital leases, synthetic lease obligations and purchase money obligations not to exceed $20 million, (vi) restricting investments in any foreign subsidiaries not to exceed $50 million in the aggregate, and (vii) including various financial covenants and certain restricted payments relating to dividends and share repurchases as specifically set forth in the 2017 Credit Agreement. The balance due on the $75.0 million term facility under the previous Credit Agreement was paid in full as a result of the execution of the 2017 Credit Agreement. The financial covenants, as defined in the 2017 Credit Agreement, require us to maintain on a consolidated basis a Leverage Ratio not to exceed 3.25:1.0 and an Interest Coverage Ratio of at least 3.00:1.0. The 2017 Credit Agreement will be used to finance working capital needs, capital improvements, dividends, future acquisitions, letter of credit needs and share repurchases. Interest rates for borrowings under the 2017 Credit Agreement are based on either a Eurodollar Rate or a Base Rate plus a margin ranging from 0.875% to 1.875% depending on our Leverage Ratio (as defined in the 2017 Credit Agreement). The Eurodollar Rate is defined as LIBOR for a term equivalent to the borrowing term (or other similar interbank rates if LIBOR is unavailable). The Base Rate is defined as the highest of the applicable Fed Funds rate plus 0.50%, the Prime rate, or the Eurodollar Rate plus 1.0% at the time of borrowing. The 2017 Credit Agreement also carries a Commitment Fee for the unfunded portion ranging from 0.175% to 0.30% per annum, depending on our Leverage Ratio.

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016	Aug. 31, 2017	Aug. 31, 2016
Numerator:
Net income for basic and diluted earnings per common share	$ 8,329	$ 10,023	$ 21,569	$ 31,086
Denominator:
Denominator for basic earnings per common share-weighted average shares (shares)	25,970	25,987	25,991	25,950
Effect of dilutive securities:
Employee and Director stock awards (shares)	66	132	74	131
Denominator for diluted earnings per common share (shares)	26,036	26,119	26,065	26,081
Earnings per share basic and diluted:
Basic earnings per Common share (usd per share)	$ 0.32	$ 0.39	$ 0.83	$ 1.20
Diluted earnings per common share (usd per share)	$ 0.32	$ 0.38	$ 0.83	$ 1.19

Stock-based Compensation (Detai

Stock-based Compensation (Details) - Restricted Stock Units (RSUs) [Member]	6 Months Ended
	Aug. 31, 2017$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Non-Vested Balance as of February 28, 2017 | shares	134,547
Granted (shares) | shares	45,613
Vested (shares) | shares	(61,361)
Forfeited (shares) | shares	(4,021)
Non-Vested Balance as of August 31, 2017 | shares	114,778
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Non-Vested Balance as of February 28, 2017 | $ / shares	$ 51.10
Granted, Weighted Average Grant Date Fair Value (usd per share) | $ / shares	60
Vested, Weighted Average Grant Date Fair Value (usd per share) | $ / shares	47.09
Forfeited, Weighted Average Grant Date Fair Value (usd per share) | $ / shares	55.50
Non-Vested Balance as of August 31, 2017 | $ / shares	$ 56.63

Stock-based Compensation (Det23

Stock-based Compensation (Details 1) - Stock Appreciation Rights (SARs) [Member] - $ / shares	6 Months Ended
	Aug. 31, 2017	Feb. 28, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	163,515	170,139
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 41.96	$ 42.02
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments, Number of Shares [Roll Forward]
Granted (shares)	0
Exercised (shares)	(4,479)
Forfeited (shares)	(2,145)
Exercisable as of August 31, 2017	153,515
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instrument, Weighted Average Grant Date Fair Value [Roll Forward]
Granted, Weighted Average Exercise Price (usd per share)	$ 0
Exercised, Weighted Average Exercise Price (usd per share)	42.54
Forfeited, Weighted Average Exercise Price (usd per share)	45.36
Exercisable as of August 31, 2017	$ 41.75

Stock-based Compensation (Det24

Stock-based Compensation (Details 2) - USD ($) $ in Thousands	6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016
Share based compensation expense and related income tax benefits
Income tax benefits	$ 1,088	$ 1,023

Stock-based Compensation (Det25

Stock-based Compensation (Details Textual)	6 Months Ended
	Aug. 31, 2017USD ($)share_based_compensation_plan$ / sharesshares	May 31, 2017shares	Feb. 28, 2017$ / sharesshares
Share Based Compensation (Textual) [Abstract]
Number Of Share-Based Compensation Plans | share_based_compensation_plan	1
Shares authorized (shares)		1,500,000
Share for future issuance (shares)	1,305,632
Unrecognized compensation cost | $	$ 8,565,163
Restricted Stock [Member]
Share Based Compensation (Textual) [Abstract]
Vesting ratably term	3 years
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	74,429		51,426
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ / shares	$ 54.53		$ 51.700
Share Based Compensation (Textual) [Abstract]
Vesting ratably term	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	25,634
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares	$ 60.20
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ / shares	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period	(2,631)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ / shares	$ 27.25
Stock Appreciation Rights (SARs) [Member]
Share Based Compensation (Textual) [Abstract]
Vesting ratably term	3 years
Term for the contract	7 years
Outstanding Average contractual term	3 years 7 days
Outstanding Aggregate intrinsic value | $	$ 1,100,000
Average remaining contractual term	3 years 2 days
Aggregate remaining intrinsic value | $	$ 1,100,000
Employee Stock [Member]
Share Based Compensation (Textual) [Abstract]
Term of offering under stock purchase plan	24 months
Granted option lower than	85.00%
Restricted common stock under plan | $	$ 25,000
Common stock purchased during period (shares)	5,000
Share-based Compensation Arrangement, By Share-based Payment Award, Common Shares Estimated To Be Issued	35,447

Segments (Details)

Segments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016	Aug. 31, 2017	Aug. 31, 2016	Feb. 28, 2017
Segment Reporting Information [Line Items]
Property, Plant and Equipment, Net	$ 230,314		$ 230,314		$ 228,610
Operations and assets by segment
Net Sales	190,407	$ 195,045	398,958	$ 437,712
Operating Income	15,056	14,889	36,963	49,397
Interest Expense	3,400	3,580	6,760	7,505
Gain (Loss) on Disposition of Property Plant Equipment	654	192	554	82
Other Nonoperating Income (Expense)	(394)	(68)	(479)	(190)
Income Before Income Taxes	11,396	11,185	30,128	42,000
Assets	1,011,401	991,734	1,011,401	991,734	977,839
Energy [Member]
Operations and assets by segment
Net Sales	91,377	97,601	207,850	235,703
Operating Income	32	8,195	8,627	26,948
Assets	551,035	543,141	551,035	543,141
Galvanizing Services [Member]
Operations and assets by segment
Net Sales	99,030	97,444	191,108	202,009
Operating Income	23,409	15,032	44,651	39,334
Assets	449,228	423,587	449,228	423,587
Corporate, Non-Segment [Member]
Operations and assets by segment
Operating Income	(8,385)	(8,338)	(16,315)	(16,885)
Corporate [Member]
Operations and assets by segment
Assets	11,138	25,006	11,138	25,006
UNITED STATES
Segment Reporting Information [Line Items]
Property, Plant and Equipment, Net	206,298		206,298		205,079
Operations and assets by segment
Net Sales	156,672	141,038	326,670	295,438
CANADA
Segment Reporting Information [Line Items]
Property, Plant and Equipment, Net	18,169		18,169		18,002
Other Countries [Member]
Segment Reporting Information [Line Items]
Property, Plant and Equipment, Net	5,847		5,847		$ 5,529
International [Member]
Operations and assets by segment
Net Sales	33,839	54,163	72,393	142,970
Geography Eliminations [Member]
Operations and assets by segment
Net Sales	$ (104)	$ (156)	$ (104)	$ (695)

Warranty Reserves (Details)

Warranty Reserves (Details) $ in Thousands	6 Months Ended
	Aug. 31, 2017USD ($)
Movement in Standard Product Warranty Accrual [Roll Forward]
Opening Balance	$ 2,098
Warranty costs incurred	993
Closing Balance	1,800
Product Warranty Accrual, Warranties Issued	$ 695

DEBT (Details)

DEBT (Details) - USD ($) $ in Thousands	Aug. 31, 2017	Feb. 28, 2017
Debt Instrument [Line Items]
Long-term Debt	$ 301,808	$ 271,429
Long-term Debt, Gross	302,286	272,290
Unamortized Debt Issuance Expense	(478)	(861)
Debt, Current	(14,286)	(16,629)
Long-term Debt, Excluding Current Maturities	287,522	254,800
Senior Notes [Member] | Unsecured Senior Notes Due January 2021 [Member]
Debt Instrument [Line Items]
Long-term Debt	125,000	125,000
Senior Notes [Member] | Unsecured Senior Notes Due March 2012 through March 2018 [Member]
Debt Instrument [Line Items]
Long-term Debt	14,286	28,571
Medium-term Notes [Member]
Debt Instrument [Line Items]
Long-term Debt	0	49,219
Line of Credit [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 163,000	$ 69,500

Realignment (Details)

Realignment (Details) - USD ($) $ in Thousands	6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	$ 0	$ (6,706)