AZZ (AZZ) 10-Q 9 Jul 20 2021 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended
	May 31, 2020shares
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	May 31, 2020
Document Transition Report	false
Entity File Number	1-12777
Entity Registrant Name	AZZ Inc.
Entity Address, Address Line One	One Museum Place, Suite 500
Entity Address, Address Line Two	3100 West 7th Street
Entity Address, City or Town	Fort Worth
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	76107
City Area Code	817
Local Phone Number	810-0095
Title of 12(b) Security	Common Stock
Trading Symbol	AZZ
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	26,195,048
Entity Central Index Key	0000008947
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--02-28

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	May 31, 2020	Feb. 29, 2020
Current assets:
Cash and cash equivalents	$ 26,414	$ 36,687
Accounts receivable (net of allowance for doubtful accounts of $4,772 as of May 31, 2020 and $4,951 as of February 29, 2020)	130,047	139,214
Inventories:
Raw material	90,092	88,837
Work-in-process	8,145	5,543
Finished goods	5,746	5,461
Contract assets	65,044	70,093
Prepaid expenses and other	9,541	8,727
Total current assets	335,029	354,562
Property, plant and equipment, net	214,965	213,104
Operating Lease, Right-of-Use Asset	41,767	43,208
Goodwill	355,808	356,225
Intangibles and other assets, net	103,204	106,732
Total assets	1,050,773	1,073,831
Current liabilities:
Accounts payable	45,895	61,987
Income tax payable	6,239	2,876
Accrued salaries and wages	12,376	38,882
Other accrued liabilities	25,778	26,868
Customer deposits	626	255
Contract liabilities	17,365	18,418
Operating Lease, Liability, Current	6,338	6,327
Total current liabilities	239,617	280,613
Debt due after one year, net	93,911	77,878
Operating Lease, Liability, Noncurrent	38,290	38,114
Other long-term liabilities	7,604	4,934
Deferred income taxes	35,695	37,926
Total liabilities	415,117	439,465
Shareholders’ equity:
Common stock, $1 par, shares authorized 100,000; 26,195 shares issued and outstanding at May 31, 2020 and 26,148 shares issued and outstanding at February 29, 2020	26,195	26,148
Capital in excess of par value	67,883	66,703
Retained earnings	573,530	572,414
Accumulated other comprehensive loss	(31,952)	(30,899)
Total shareholders’ equity	635,656	634,366
Total liabilities and shareholders' equity	$ 1,050,773	$ 1,073,831

Condensed consolidated Balanc_2

Condensed consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	May 31, 2020	Feb. 29, 2020
Statement of Financial Position [Abstract]
Accounts Receivable, Allowance for Doubtful Accounts	$ 4,772	$ 4,951
Common Stock, Par Value (usd per share)	$ 1	$ 1
Common Stock, Shares Authorized (shares)	100,000	100,000
Common Stock, Shares Issued (shares)	26,195	26,148
Common Stock, Shares, Outstanding	26,195	26,148

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2020	May 31, 2019
Income Statement [Abstract]
Revenues	$ 213,293	$ 289,123
Costs and Expenses
Cost of Revenue	171,085	223,016
Gross margin	42,208	66,107
Selling, general and administrative	27,890	35,133
Operating income	14,318	30,974
Interest expense	2,634	3,584
Other expense, net	1,456	424
Income before income taxes	10,228	26,966
Income tax expense	4,687	5,682
Net income	$ 5,541	$ 21,284
Earnings Per Common Share
Basic Earnings Per Share (usd per share)	$ 0.21	$ 0.81
Diluted Earnings Per Share (usd per share)	0.21	0.81
Common Stock, Dividends, Per Share, Declared	$ 0.17	$ 0.17

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2020	May 31, 2019
Statement of Comprehensive Income [Abstract]
Net income	$ 5,541	$ 21,284
Other comprehensive income (loss):
Foreign currency translation adjustments, net of income tax of $0	(1,039)	(1,960)
Interest rate swap, net of income tax of $7 and $7, respectively.	(14)	(14)
Other comprehensive loss	(1,053)	(1,974)
Comprehensive income	$ 4,488	$ 19,310

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2020	May 31, 2019
Statement of Comprehensive Income [Abstract]
Interest rate swap, income tax	$ 7	$ 7

Condensed Consolidated Statem_4

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	May 31, 2020	May 31, 2019	Aug. 31, 2016
Cash Flows From Operating Activities:
Net income	$ 5,541	$ 21,284
Adjustments to reconcile net income to net cash used in operating activities:
Provision for doubtful accounts	129	2,616
Amortization and depreciation	11,668	12,326
Deferred income taxes	(2,147)	668
Net (gain) loss on sale of property, plant and equipment	40	(200)
Amortization of deferred borrowing costs	135	136
Share-based compensation expense	1,766	1,350
Effects of changes in assets and liabilities, net of acquisitions:
Accounts receivable	8,721	(14,228)
Inventories	(4,449)	7,681
Prepaid expenses and other	(941)	(1,240)
Other assets	123	185
Net change in contract assets and liabilities	3,168	(55,088)
Accounts payable	(15,328)	7,068
Other accrued liabilities and income taxes payable	(19,610)	(454)
Net cash used in operating activities	(11,184)	(17,896)
Cash Flows Used For Investing Activities:
Proceeds from sale of property, plant and equipment	0	210
Purchase of Property, Plant and Equipment	(10,847)	(4,686)
Acquisition of Subsidiaries, Net of Cash Acquired	0	(38,993)
Net Cash From Investing Activities	(10,847)	(43,469)
Cash Flows From Financing Activities:
Excess Tax Benefits From Stock Options and Stock Appreciation Rights		(539)	$ (691)
Proceeds from revolving loan	76,000	187,000
Payments on revolving loan	(60,000)	(131,000)
Payments of Dividends	(4,425)	(4,440)
Net Cash Used In Financing Activities	11,036	50,869
Effect of Exchange Rate Changes on Cash	722	77
Net Increase (Decrease) In Cash & Cash Equivalents	(10,273)	(10,419)
Cash & Cash Equivalents At Beginning of Period	36,687	24,005
Cash & Cash Equivalents At End of Period	26,414	13,586
Supplemental Disclosures
Cash Paid For Interest	869	1,600
Cash Paid For Income Taxes	$ 11	$ 567

Consolidated Statement of Share

Consolidated Statement of Shareholders' Equity - CY Statement - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Balance (shares) at Feb. 28, 2019		26,115
Balance at Feb. 28, 2019	$ 603,728	$ 26,115	$ 46,141	$ 560,224	$ (28,752)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Compensation (shares)		0
Restricted Stock Units (shares)		37
Stock Compensation	1,350	$ 0	1,350
Restricted Stock Units	(691)	$ 37	(728)
Cash Dividend Paid	(4,440)			(4,440)
Net income	21,284			21,284
Foreign Currency Translation	(1,960)				(1,960)
Interest rate swap	(14)				(14)
Balance (shares) at May. 31, 2019		26,152
Balance at May. 31, 2019	619,257	$ 26,152	46,763	577,068	(30,726)
Balance (shares) at Feb. 29, 2020		26,148
Balance at Feb. 29, 2020	634,366	$ 26,148	66,703	572,414	(30,899)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Compensation (shares)		0
Restricted Stock Units (shares)		47
Stock Compensation	1,766	$ 0	1,766
Restricted Stock Units	(539)	$ 47	(586)
Cash Dividend Paid	(4,425)			(4,425)
Net income	5,541			5,541
Foreign Currency Translation	(1,039)				(1,039)
Interest rate swap	(14)				(14)
Balance (shares) at May. 31, 2020		26,195
Balance at May. 31, 2020	$ 635,656	$ 26,195	$ 67,883	$ 573,530	$ (31,952)

Consolidated Statement of Sha_2

Consolidated Statement of Shareholders' Equity - PY Statement - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]
Balance (shares) at Feb. 28, 2019		26,115
Balance at Feb. 28, 2019	$ 603,728	$ 26,115	$ 46,141	$ 560,224	$ (28,752)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Compensation (shares)		0
Stock Compensation	1,350	$ 0	1,350
Restricted Stock Units (shares)		37
Restricted Stock Units	(691)	$ 37	(728)
Cash Dividend Paid	(4,440)			(4,440)
Net income	21,284			21,284
Foreign Currency Translation	(1,960)				(1,960)
Interest rate swap	(14)				(14)
Balance (shares) at May. 31, 2019		26,152
Balance at May. 31, 2019	619,257	$ 26,152	46,763	577,068	(30,726)
Balance (shares) at Feb. 29, 2020		26,148
Balance at Feb. 29, 2020	634,366	$ 26,148	66,703	572,414	(30,899)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Compensation (shares)		0
Stock Compensation	1,766	$ 0	1,766
Restricted Stock Units (shares)		47
Restricted Stock Units	(539)	$ 47	(586)
Cash Dividend Paid	(4,425)			(4,425)
Net income	5,541			5,541
Foreign Currency Translation	(1,039)				(1,039)
Interest rate swap	(14)				(14)
Balance (shares) at May. 31, 2020		26,195
Balance at May. 31, 2020	$ 635,656	$ 26,195	$ 67,883	$ 573,530	$ (31,952)

Basis of Presentation (Notes)

Basis of Presentation (Notes)	3 Months Ended
	May 31, 2020
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. The Company is a global provider of metal coating solutions, welding solutions, specialty electrical equipment and highly engineered services to the power generation, transmission, distribution, refining and industrial markets. The Company has two distinct operating segments: the Metal Coatings segment and the Energy segment. AZZ Metal Coatings provides hot dip 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. 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. Presentation The accompanying condensed consolidated balance sheet as of February 29, 2020, 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 29, 2020, 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 ending February 28, 2021 is referred to as fiscal 2021. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, which are necessary to present fairly the financial position of the Company as of May 31, 2020, the results of its operations for the three months ended May 31, 2020 and 2019, and cash flows for the three months ended May 31, 2020 and 2019. These interim results are not necessarily indicative of results for a full year. Coronavirus (COVID-19) In March 2020, the World Health Organization declared the viral strain of coronavirus ("COVID-19") a global pandemic and recommended containment and mitigation measures worldwide. The spread of COVID-19 and the resulting economic contraction has resulted in increased business uncertainty. The consequences of a prolonged economic decline could include, but are not limited to, reduced revenues, increased instances of uncollectible customer receivables, and increased asset impairments in future periods. Accordingly, the Company cannot reasonably estimate the length or severity of this pandemic, or the extent to which the disruption may materially impact its consolidated balance sheet, statements of income or statements of cash flows for fiscal year 2021. Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument s (“ASU 2016-13”), which modifies the measurement of expected credit losses of certain financial instruments, including the Company's accounts receivable and contract assets. The Company adopted ASU 2016-13 in the first quarter of its fiscal 2021 utilizing the modified retrospective transition method. The adoption of ASU 2016-13 did not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"), which aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software, in order to determine the applicable costs to capitalize and the applicable costs to expense as incurred. The Company adopted ASU 2018-15 in the first quarter of its fiscal 2021 and the adoption did not have a material impact on its consolidated financial statements.

Earnings Per Share

Earnings Per Share	3 Months Ended
	May 31, 2020
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 Company stock awards. The following table sets forth the computation of basic and diluted earnings per share (in thousands, expect per share data): Three Months Ended May 31, 2020 2019 Numerator: Net income for basic and diluted earnings per common share $ 5,541 $ 21,284 Denominator: Denominator for basic earnings per common share–weighted average shares 26,157 26,124 Effect of dilutive securities: Employee and director equity awards 35 69 Denominator for diluted earnings per common share 26,192 26,193 Earnings per share basic and diluted: Basic earnings per common share $ 0.21 $ 0.81 Diluted earnings per common share $ 0.21 $ 0.81

Revenues (Notes)

Revenues (Notes)	3 Months Ended
	May 31, 2020
Revenues [Abstract]
Revenue from Contract with Customer [Text Block]	Revenues Disaggregated Revenue The following table presents disaggregated revenue by customer industry (in thousands): Three Months Ended May 31, 2020 2019 Net sales: Industrial - oil and gas, construction, and general $ 130,109 $ 164,800 Transmission and distribution 49,057 72,281 Power generation 34,127 52,042 Total net sales $ 213,293 $ 289,123 See Note 4 for revenue information by segment. Contract Liabilities The following table shows the changes in contract liabilities for the three months ended May 31, 2020 and 2019, respectively (in thousands): May 31, 2020 May 31, 2019 Balance at beginning of period $ 18,418 $ 56,928 Contract liabilities added during the period 4,796 10,970 Revenue recognized during the period (5,849) (45,579) Balance at end of period $ 17,365 $ 22,319 The Company did not record any revenues for the three months ended May 31, 2020 or 2019 related to performance obligations satisfied in prior periods. The increases or decreases in accounts receivable, contract assets, and contract liabilities during the three months ended May 31, 2020 and 2019 were due primarily to normal timing differences between the Company’s performance and customer payments. The acquisitions described in Note 10 had no impact on contract assets or liabilities as of the date of acquisitions. The Company expects to recognize revenues of approximately $10.3 million, $4.6 million, $2.3 million and $0.2 million in fiscal 2021, 2022, 2023 and 2024, respectively, related to the $17.4 million balance of contract liabilities as of May 31, 2020.

Stock-based Compensation

Stock-based Compensation	3 Months Ended
	May 31, 2020
Share-based Payment Arrangement, Noncash Expense [Abstract]
Stock-based Compensation	Share-based Compensation The Company has two share-based compensation plans, the 2014 Long Term Incentive Plan (the "2014 Plan") and the Amended and Restated 2005 Long Term Incentive Plan (the “2005 Plan”). The 2014 Plan provides for broad-based equity grants to employees, including executive officers, and members of the board of directors and permits the granting of restricted shares, restricted stock units, performance awards, stock appreciation rights and other stock-based awards. The maximum number of shares that may be issued under the 2014 Plan is 1.5 million shares and, as of May 31, 2020, the Company had approximately 1.2 million shares reserved for future issuance under this plan. The 2005 Plan permitted the granting of stock appreciation rights and other equity-based awards to certain employees. This plan was terminated upon the effective date of the 2014 Plan and no future grants may be made under the 2005 Plan. There were stock appreciation rights granted under the 2005 Plan prior to its termination that remain outstanding, and if exercised, such awards will be settled from the balance of shares available for issuance under the 2005 Plan. As of May 31, 2020, there were 0.1 million shares available for issuance under the 2005 Plan. The 2005 Plan will be formally retired when all remaining outstanding stock appreciation rights are exercised, forfeited or expire. All outstanding stock appreciation rights will expire on or before March 1, 2021. Restricted Stock Unit Awards Restricted stock unit ("RSU") awards are valued at the market price of our common stock on the grant date. Awards generally vest ratably over a period of three years but these awards may vest earlier in accordance with the Plan’s vesting provisions. RSU awards have dividend equivalent rights (“DERs”), which entitle holders of RSUs to the same dividend value per share as holders of common stock. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. DERs are accumulated and paid when the underlying awards vest. A summary of the Company’s non-vested restricted stock unit award activity (including DERs) for the three months ended May 31, 2020 is as follows: Restricted Weighted Average Outstanding at beginning of period 194,946 $ 44.34 Granted 125,770 28.61 Vested (63,292) 45.94 Forfeited (7,128) 42.98 Outstanding at end of period 250,296 $ 35.98 Performance Share Unit Awards The Company grants performance share unit ("PSU") awards to certain employees, which also include DERs as described above. These PSU awards have a three year performance cycle and will vest on the third anniversary of the grant date subject to various vesting conditions. Certain PSU awards have vesting conditions based on the Company’s degree of achievement of a target annual average adjusted return on assets during these three year periods relative to the performance of a predetermined group of peer companies. In addition, these PSU awards may have vesting conditions or certain vesting multipliers, which are based on the Company’s total shareholder return during such three years in comparison to a defined specific industry peer group. The Company estimates the fair value of PSU awards using a Monte Carlo simulation model on the date of grant. A summary of the Company’ non-vested performance share unit award activity (including DERs) for the three months ended May 31, 2020 is as follows: Performance Weighted Average Outstanding at the beginning of the period 109,936 $ 47.75 Granted 69,955 33.22 Vested — — Forfeited (32,111) 54.00 Outstanding at the end of the period 147,780 $ 39.35 The PSU awards in the table above are presented at the face value of the respective grants. However, the number of PSU awards that may ultimately vest can vary in a range 0% to 250% of the face amount of such awards depending on the outcome of the performance or market vesting conditions. Stock Appreciation Rights Stock appreciation rights ('SARs") were 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 generally vest ratably over a period of three years from the date of grant although some may vest immediately on issuance. These awards are valued using the Black-Scholes option-pricing model. A summary of the Company’s SARs activity for the three months ended May 31, 2020 is as follows: SARs Weighted Average Outstanding at beginning of period 94,826 $ 44.58 Granted — — Exercised — — Forfeited (1,362) 45.36 Outstanding at end of the period 93,464 $ 44.57 Exercisable at the ending of the period 93,464 $ 44.57 The average remaining contractual term for SARs outstanding and SARs that were exercisable as of May 31, 2020 was 0.62 years and such awards had no intrinsic value. Employee Stock Purchase Plan The Company also has an Employee Stock Purchase Plan ("ESPP"), which allows employees of the Company to purchase common stock of the Company through accumulated payroll deductions. Offerings under the ESPP have a duration of 24 months (the "offering period") and commence on each January 1 and July 1, and ending on June 30 and December 31, respectively. 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 the Company's 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. The Company did not issue any shares from the ESPP during the three months ended May 31, 2020 and 2019, respectively. Share-based Compensation Expense Share-based compensation expense and related income tax benefits related to all the plans listed above were as follows (in thousands): Three Months Ended May 31, 2020 2019 Compensation expense $ 1,766 $ 1,350 Income tax benefits $ 390 $ 284 Unrecognized compensation cost related to the Company's employee equity grants at May 31, 2020 totals $13.4 million and is expected to be recognized over a period of 2.25 years.

Segments

Segments	3 Months Ended
	May 31, 2020
Segment Reporting [Abstract]
Segments	Segments Segment Information Net sales and operating income (loss) by segment for each period were as follows (in thousands): Three Months Ended May 31, 2020 2019 Net sales: Metal Coatings $ 118,991 $ 122,154 Energy 94,302 166,969 Total net sales $ 213,293 $ 289,123 Operating income (loss): Metal Coatings $ 25,085 $ 29,392 Energy (1,048) 12,571 Corporate (9,719) (10,989) Total operating income $ 14,318 $ 30,974 Asset balances by segment for each period were as follows (in thousands): May 31, 2020 February 29, 2020 Total assets: Metal Coatings $ 497,742 $ 504,632 Energy 525,125 548,032 Corporate 27,906 21,167 Total $ 1,050,773 $ 1,073,831 Financial Information About Geographical Areas The following table presents revenues by geographic region for each period (in thousands): Three Months Ended May 31, 2020 2019 Net sales: United States $ 190,842 $ 230,337 International 22,451 58,786 Total $ 213,293 $ 289,123 The following table presents fixed assets by geographic region for each period (in thousands): May 31, 2020 February 29, 2020 Property, plant and equipment, net: United States $ 194,012 $ 190,365 Canada 15,647 16,385 Other countries 5,306 6,354 Total $ 214,965 $ 213,104

Warranty Reserves

Warranty Reserves	3 Months Ended
	May 31, 2020
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 other accrued liabilities on the condensed consolidated balance sheets. Management periodically reviews established reserves and makes adjustments based upon the progression of activities with our customers. Warranties typically cover non-conformance to specifications and defects in material and workmanship. The following table shows the changes in the warranty reserves for the three months ended May 31, 2020 (in thousands): Beginning of period $ 3,702 Warranty costs incurred (509) Additions charged to income 327 End of period $ 3,520

Debt

Debt	3 Months Ended
	May 31, 2020
Debt [Abstract]
Long-term Debt [Text Block]	Debt The Company's debt consisted of the following for each of the periods presented (in thousands): May 31, 2020 February 29, 2020 2017 Revolving Credit Facility $ 94,000 $ 78,000 2011 Senior Notes 125,000 125,000 Total debt, gross 219,000 203,000 Unamortized debt issuance costs (89) (122) Total debt, net 218,911 202,878 Less amount due within one year (125,000) (125,000) Debt due after one year, net $ 93,911 $ 77,878

Leases (Notes)

Leases (Notes)	3 Months Ended
	May 31, 2020
Leases [Abstract]
Leases of Lessee Disclosure [Text Block]	Leases The Company is a lessee under various operating leases for facilities and equipment. Supplemental information related to the Company's portfolio of operating leases was as follows (in thousands, except years and percentages): Three Months Ended May 31, 2020 2019 Operating lease cost $ 4,474 $ 4,266 Operating cash flows from operating leases included in lease liabilities 2,119 2,275 ROU assets obtained in exchange for new operating lease liabilities 204 2,506 May 31, 2020 February 29, 2020 Weighted-average remaining lease term - operating leases 7.59 years 7.94 years Weighted-average discount rate - operating leases 4.95 % 4.89 % As of May 31, 2020, maturities of the Company's lease liabilities were as follows (in thousands): Fiscal year: 2021 (remaining 9 months) $ 6,224 2022 8,037 2023 7,553 2024 6,725 2025 5,776 Thereafter 17,493 Total lease payments 51,808 Less imputed interest (8,789) Total $ 43,019

Basis of Presentation (Policies

Basis of Presentation (Policies)	3 Months Ended
	May 31, 2020
Accounting Policies [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. The Company is a global provider of metal coating solutions, welding solutions, specialty electrical equipment and highly engineered services to the power generation, transmission, distribution, refining and industrial markets. The Company has two distinct operating segments: the Metal Coatings segment and the Energy segment. AZZ Metal Coatings provides hot dip 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. 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. Presentation The accompanying condensed consolidated balance sheet as of February 29, 2020, 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 29, 2020, 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 ending February 28, 2021 is referred to as fiscal 2021. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, which are necessary to present fairly the financial position of the Company as of May 31, 2020, the results of its operations for the three months ended May 31, 2020 and 2019, and cash flows for the three months ended May 31, 2020 and 2019. These interim results are not necessarily indicative of results for a full year. Coronavirus (COVID-19) In March 2020, the World Health Organization declared the viral strain of coronavirus ("COVID-19") a global pandemic and recommended containment and mitigation measures worldwide. The spread of COVID-19 and the resulting economic contraction has resulted in increased business uncertainty. The consequences of a prolonged economic decline could include, but are not limited to, reduced revenues, increased instances of uncollectible customer receivables, and increased asset impairments in future periods. Accordingly, the Company cannot reasonably estimate the length or severity of this pandemic, or the extent to which the disruption may materially impact its consolidated balance sheet, statements of income or statements of cash flows for fiscal year 2021.
New Accounting Pronouncements	Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument s (“ASU 2016-13”), which modifies the measurement of expected credit losses of certain financial instruments, including the Company's accounts receivable and contract assets. The Company adopted ASU 2016-13 in the first quarter of its fiscal 2021 utilizing the modified retrospective transition method. The adoption of ASU 2016-13 did not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"), which aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software, in order to determine the applicable costs to capitalize and the applicable costs to expense as incurred. The Company adopted ASU 2018-15 in the first quarter of its fiscal 2021 and the adoption did not have a material impact on its consolidated financial statements.

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	May 31, 2020
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 (in thousands, expect per share data): Three Months Ended May 31, 2020 2019 Numerator: Net income for basic and diluted earnings per common share $ 5,541 $ 21,284 Denominator: Denominator for basic earnings per common share–weighted average shares 26,157 26,124 Effect of dilutive securities: Employee and director equity awards 35 69 Denominator for diluted earnings per common share 26,192 26,193 Earnings per share basic and diluted: Basic earnings per common share $ 0.21 $ 0.81 Diluted earnings per common share $ 0.21 $ 0.81

Revenues (Tables)

Revenues (Tables)	3 Months Ended
	May 31, 2020
Revenues [Abstract]
Disaggregation of Revenue [Table Text Block]	Disaggregated Revenue The following table presents disaggregated revenue by customer industry (in thousands): Three Months Ended May 31, 2020 2019 Net sales: Industrial - oil and gas, construction, and general $ 130,109 $ 164,800 Transmission and distribution 49,057 72,281 Power generation 34,127 52,042 Total net sales $ 213,293 $ 289,123
Contract with Customer, Asset and Liability [Table Text Block]	Contract Liabilities The following table shows the changes in contract liabilities for the three months ended May 31, 2020 and 2019, respectively (in thousands): May 31, 2020 May 31, 2019 Balance at beginning of period $ 18,418 $ 56,928 Contract liabilities added during the period 4,796 10,970 Revenue recognized during the period (5,849) (45,579) Balance at end of period $ 17,365 $ 22,319

Stock-based Compensation (Table

Stock-based Compensation (Tables)	3 Months Ended
	May 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation, Performance Shares Award Unvested Activity [Table Text Block]	non-vested performance share unit award activity (including DERs) for the three months ended May 31, 2020 is as follows: Performance Weighted Average Outstanding at the beginning of the period 109,936 $ 47.75 Granted 69,955 33.22 Vested — — Forfeited (32,111) 54.00 Outstanding at the end of the period 147,780 $ 39.35
Restricted Stock Unit Awards Non-Vested	non-vested restricted stock unit award activity (including DERs) for the three months ended May 31, 2020 is as follows: Restricted Weighted Average Outstanding at beginning of period 194,946 $ 44.34 Granted 125,770 28.61 Vested (63,292) 45.94 Forfeited (7,128) 42.98 Outstanding at end of period 250,296 $ 35.98
Stock Appreciation Rights and Option Awards	A summary of the Company’s SARs activity for the three months ended May 31, 2020 is as follows: SARs Weighted Average Outstanding at beginning of period 94,826 $ 44.58 Granted — — Exercised — — Forfeited (1,362) 45.36 Outstanding at end of the period 93,464 $ 44.57 Exercisable at the ending of the period 93,464 $ 44.57
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 (in thousands): Three Months Ended May 31, 2020 2019 Compensation expense $ 1,766 $ 1,350 Income tax benefits $ 390 $ 284

Segments (Tables)

Segments (Tables)	3 Months Ended
	May 31, 2020
Segment Reporting Information [Line Items]
Schedule of Segment Reporting Information, by Segment [Table Text Block]	Net sales and operating income (loss) by segment for each period were as follows (in thousands): Three Months Ended May 31, 2020 2019 Net sales: Metal Coatings $ 118,991 $ 122,154 Energy 94,302 166,969 Total net sales $ 213,293 $ 289,123 Operating income (loss): Metal Coatings $ 25,085 $ 29,392 Energy (1,048) 12,571 Corporate (9,719) (10,989) Total operating income $ 14,318 $ 30,974
Reconciliation of Assets from Segment to Consolidated [Table Text Block]	Asset balances by segment for each period were as follows (in thousands): May 31, 2020 February 29, 2020 Total assets: Metal Coatings $ 497,742 $ 504,632 Energy 525,125 548,032 Corporate 27,906 21,167 Total $ 1,050,773 $ 1,073,831
Revenue from External Customers by Geographic Areas [Table Text Block]	The following table presents revenues by geographic region for each period (in thousands): Three Months Ended May 31, 2020 2019 Net sales: United States $ 190,842 $ 230,337 International 22,451 58,786 Total $ 213,293 $ 289,123
Long-lived Assets by Geographic Areas [Table Text Block]	The following table presents fixed assets by geographic region for each period (in thousands): May 31, 2020 February 29, 2020 Property, plant and equipment, net: United States $ 194,012 $ 190,365 Canada 15,647 16,385 Other countries 5,306 6,354 Total $ 214,965 $ 213,104

Warranty Reserves (Tables)

Warranty Reserves (Tables)	3 Months Ended
	May 31, 2020
Product Warranties Disclosures [Abstract]
Changes in the warranty reserves	The following table shows the changes in the warranty reserves for the three months ended May 31, 2020 (in thousands): Beginning of period $ 3,702 Warranty costs incurred (509) Additions charged to income 327 End of period $ 3,520

Debt (Tables)

Debt (Tables)	3 Months Ended
	May 31, 2020
Debt [Abstract]
Schedule of Debt [Table Text Block]	The Company's debt consisted of the following for each of the periods presented (in thousands): May 31, 2020 February 29, 2020 2017 Revolving Credit Facility $ 94,000 $ 78,000 2011 Senior Notes 125,000 125,000 Total debt, gross 219,000 203,000 Unamortized debt issuance costs (89) (122) Total debt, net 218,911 202,878 Less amount due within one year (125,000) (125,000) Debt due after one year, net $ 93,911 $ 77,878

Leases (Tables)

Leases (Tables)	3 Months Ended
	May 31, 2020
Leases [Abstract]
Lessee, Operating Lease, Disclosure [Table Text Block]	Supplemental information related to the Company's portfolio of operating leases was as follows (in thousands, except years and percentages): Three Months Ended May 31, 2020 2019 Operating lease cost $ 4,474 $ 4,266 Operating cash flows from operating leases included in lease liabilities 2,119 2,275 ROU assets obtained in exchange for new operating lease liabilities 204 2,506 May 31, 2020 February 29, 2020 Weighted-average remaining lease term - operating leases 7.59 years 7.94 years Weighted-average discount rate - operating leases 4.95 % 4.89 %
Lessee, Operating Lease, Liability, Maturity [Table Text Block]	As of May 31, 2020, maturities of the Company's lease liabilities were as follows (in thousands): Fiscal year: 2021 (remaining 9 months) $ 6,224 2022 8,037 2023 7,553 2024 6,725 2025 5,776 Thereafter 17,493 Total lease payments 51,808 Less imputed interest (8,789) Total $ 43,019

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	May 31, 2020	May 31, 2019
Numerator:
Net income for basic and diluted earnings per common share	$ 5,541	$ 21,284
Denominator:
Denominator for basic earnings per common share-weighted average shares (shares)	26,157	26,124
Effect of dilutive securities:
Employee and Director stock awards (shares)	35	69
Denominator for diluted earnings per common share (shares)	26,192	26,193
Earnings per share basic and diluted:
Basic earnings per Common share (usd per share)	$ 0.21	$ 0.81
Diluted earnings per common share (usd per share)	$ 0.21	$ 0.81

Revenues Disaggregated Revenues

Revenues Disaggregated Revenues (Details) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2020	May 31, 2019
Disaggregation of Revenue [Line Items]
Revenues	$ 213,293	$ 289,123
Industrial [Member]
Disaggregation of Revenue [Line Items]
Revenues	130,109	164,800
Transmission and Distribution [Member]
Disaggregation of Revenue [Line Items]
Revenues	49,057	72,281
Power Generation [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 34,127	$ 52,042

Revenues Contract Liability (De

Revenues Contract Liability (Details) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2020	May 31, 2019	Feb. 29, 2020	Feb. 28, 2019
Contract Liability [Abstract]
Contract with Customer, Liability	$ 17,365	$ 22,319	$ 18,418	$ 56,928
Increase (Decrease) in Contract with Customer, Liability	4,796	10,970
Contract with Customer, Liability, Revenue Recognized	$ (5,849)	$ (45,579)

Revenues Future Revenues (Detai

Revenues Future Revenues (Details)	3 Months Ended
	May 31, 2020
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Explanation	The Company expects to recognize revenues of approximately $10.3 million, $4.6 million, $2.3 million and $0.2 million in fiscal 2021, 2022, 2023 and 2024

Stock-based Compensation (Detai

Stock-based Compensation (Details) - Restricted Stock Units (RSUs) [Member]	3 Months Ended
	May 31, 2020$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at beginning of period | shares	194,946
Granted (shares) | shares	125,770
Vested (shares) | shares	(63,292)
Forfeited (shares) | shares	(7,128)
Outstanding at end of period | shares	250,296
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Outstanding at beginning of period | $ / shares	$ 44.34
Granted, Weighted Average Grant Date Fair Value (usd per share) | $ / shares	28.61
Vested, Weighted Average Grant Date Fair Value (usd per share) | $ / shares	45.94
Forfeited, Weighted Average Grant Date Fair Value (usd per share) | $ / shares	42.98
Outstanding at end of period | $ / shares	$ 35.98

Stock-based Compensation (Det_2

Stock-based Compensation (Details 1) - Stock Appreciation Rights (SARs) [Member] - $ / shares	3 Months Ended
	May 31, 2020	Feb. 29, 2020
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	93,464	94,826
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 44.57	$ 44.58
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments, Number of Shares [Roll Forward]
Granted (shares)	0
Exercised (shares)	0
Forfeited (shares)	(1,362)
Exercisable at the ending of the period	93,464
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)	0
Forfeited, Weighted Average Exercise Price (usd per share)	45.36
Exercisable at the ending of the period	$ 44.57

Stock-based Compensation (Det_3

Stock-based Compensation (Details 2) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2020	May 31, 2019
Share-based Payment Arrangement, Noncash Expense [Abstract]
Share-based Payment Arrangement, Noncash Expense	$ 1,766	$ 1,350
Share based compensation expense and related income tax benefits
Income tax benefits	$ 390	$ 284

Stock-based Compensation (Det_4

Stock-based Compensation (Details Textual)	3 Months Ended
	May 31, 2020USD ($)share_based_compensation_plan$ / sharesshares	Feb. 29, 2020$ / sharesshares
Share Based Compensation (Textual) [Abstract]
Number Of Share-Based Compensation Plans | share_based_compensation_plan	2
Unrecognized compensation cost | $	$ 13,400,000
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	147,780	109,936
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ / shares	$ 39.35	$ 47.75
Share Based Compensation (Textual) [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	69,955
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares	$ 33.22
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	(32,111)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ / shares	$ 54
Stock Appreciation Rights (SARs) [Member]
Share Based Compensation (Textual) [Abstract]
Term for the contract	7 years
Outstanding Average contractual term	7 months 13 days
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
2014 Long Term Incentive Plan [Member]
Share Based Compensation (Textual) [Abstract]
Shares authorized (shares)	1,500,000
Share for future issuance (shares)	1,200,000
2005 Long Term Incentive Plan [Member]
Share Based Compensation (Textual) [Abstract]
Shares authorized (shares)	100,000

Segments (Details)

Segments (Details) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2020	May 31, 2019	Feb. 29, 2020
Segment Reporting Information [Line Items]
Property, Plant and Equipment, Net	$ 214,965		$ 213,104
Operations and assets by segment
Operating Income	14,318	$ 30,974
Assets	1,050,773		1,073,831
Revenues	213,293	289,123
Metal Coatings
Operations and assets by segment
Operating Income	25,085	29,392
Assets	497,742		504,632
Revenues	118,991	122,154
Energy
Operations and assets by segment
Operating Income	(1,048)	12,571
Assets	525,125		548,032
Revenues	94,302	166,969
Corporate
Operations and assets by segment
Operating Income	(9,719)	(10,989)
Corporate
Operations and assets by segment
Assets	27,906		21,167
UNITED STATES
Segment Reporting Information [Line Items]
Property, Plant and Equipment, Net	194,012		190,365
Operations and assets by segment
Revenues	190,842	230,337
CANADA
Segment Reporting Information [Line Items]
Property, Plant and Equipment, Net	15,647		16,385
Other Countries [Member]
Segment Reporting Information [Line Items]
Property, Plant and Equipment, Net	5,306		$ 6,354
International [Member]
Operations and assets by segment
Revenues	$ 22,451	$ 58,786

Warranty Reserves (Details)

Warranty Reserves (Details) $ in Thousands	3 Months Ended
	May 31, 2020USD ($)
Movement in Standard Product Warranty Accrual [Roll Forward]
Opening Balance	$ 3,702
Warranty costs incurred	509
Closing Balance	3,520
Product Warranty Accrual, Warranties Issued	$ 327

Debt (Details)

Debt (Details) - USD ($) $ in Thousands	May 31, 2020	Feb. 29, 2020
Debt Instrument [Line Items]
Long-term Debt	$ 218,911	$ 202,878
Long-term Debt, Gross	219,000	203,000
Unamortized Debt Issuance Expense	(89)	(122)
Long-term Debt, Excluding Current Maturities	93,911	77,878
Senior Notes [Member] | Unsecured Senior Notes Due January 2021 [Member]
Debt Instrument [Line Items]
Long-term Debt	125,000	125,000
Line of Credit [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 94,000	$ 78,000

Leases Lease Information (Detai

Leases Lease Information (Details) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2020	May 31, 2019	Feb. 29, 2020
Leases [Abstract]
Operating Lease, Weighted Average Remaining Lease Term	7 years 7 months 2 days		7 years 11 months 8 days
Operating Lease, Cost	$ 4,474	$ 4,266
Operating Lease, Payments	2,119	2,275
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	$ 204	$ 2,506
Operating Lease, Weighted Average Discount Rate, Percent	4.95%		4.89%

Leases Lease Maturities (Detail

Leases Lease Maturities (Details) $ in Thousands	May 31, 2020USD ($)
Maturities [Abstract]
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year	$ 6,224
Lessee, Operating Lease, Liability, Payments, Due Year Two	8,037
Lessee, Operating Lease, Liability, Payments, Due Year Three	7,553
Lessee, Operating Lease, Liability, Payments, Due Year Four	6,725
Lessee, Operating Lease, Liability, Payments, Due Year Five	5,776
Lessee, Operating Lease, Liability, Payments, Due after Year Five	17,493
Lessee, Operating Lease, Liability, Payments, Due	51,808
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	(8,789)
Operating Lease, Liability	$ 43,019