AZZ (AZZ) 10-Q 9 Jul 21 2022 Q1 Quarterly report Financial data

Cover Page

Cover Page - shares	3 Months Ended
	May 31, 2021	Jun. 30, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	May 31, 2021
Document Transition Report	false
Entity File Number	1-12777
Entity Registrant Name	AZZ Inc.
Entity Incorporation, State or Country Code	TX
Entity Tax Identification Number	75-0948250
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		25,071,582
Entity Central Index Key	0000008947
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--02-28

Condensed Consolidated Balance

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

Condensed consolidated Balanc_2

Condensed consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	May 31, 2021	Feb. 28, 2021
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 5,362	$ 5,713
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)	25,071,000	25,108,000
Common Stock, Shares, Outstanding (shares)	25,071,000	25,108,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	May 31, 2021	May 31, 2020
Income Statement [Abstract]
Sales	$ 229,826	$ 213,293
Costs and Expenses
Cost of sales	171,899	171,085
Gross margin	57,927	42,208
Selling, general and administrative	27,215	27,890
Operating income	30,712	14,318
Interest expense	1,697	2,634
Other (income) expense, net	(969)	1,456
Income before income taxes	29,984	10,228
Income tax expense	7,647	4,687
Net income	$ 22,337	$ 5,541
Earnings Per Common Share
Basic earnings per share (usd per share)	$ 0.89	$ 0.21
Diluted earnings per share (usd per share)	0.88	0.21
Cash dividends declared per common share (usd per share)	$ 0.17	$ 0.17

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2021	May 31, 2020
Statement of Comprehensive Income [Abstract]
Net income	$ 22,337	$ 5,541
Other comprehensive income (loss):
Foreign currency translation adjustments, net of income tax of $0	2,581	(1,039)
Interest rate swap, net of income tax of $0 and $7, respectively	0	(14)
Other comprehensive income (loss)	2,581	(1,053)
Comprehensive income	$ 24,918	$ 4,488

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2021	May 31, 2020
Statement of Comprehensive Income [Abstract]
Foreign currency translation adjustments, tax	$ 0	$ 0
Interest rate swap, income tax	$ 0	$ 7

Condensed Consolidated Statem_4

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2021	May 31, 2020
Cash Flows From Operating Activities:
Net income	$ 22,337	$ 5,541
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Bad debt expense	(218)	129
Amortization and depreciation	11,084	11,668
Deferred income taxes	(892)	(2,147)
Net (gain) loss on sale of property, plant and equipment	(15)	40
Amortization of deferred borrowing costs	139	135
Share-based compensation expense	1,811	1,766
Effects of changes in assets and liabilities, net of acquisitions and dispositions:
Accounts receivable	(7,966)	8,721
Inventories	(8,254)	(4,449)
Prepaid expenses and other	(5,419)	(941)
Other assets	(778)	123
Net change in contract assets and liabilities	(9,839)	3,168
Accounts payable	6,321	(15,328)
Other accrued liabilities and income taxes payable	2,749	(19,610)
Net cash provided by (used in) operating activities	11,060	(11,184)
Cash Flows Used For Investing Activities:
Proceeds from sale of property, plant and equipment	23	0
Purchase of property, plant and equipment	(7,489)	(10,847)
Net cash used in investing activities	(7,466)	(10,847)
Cash Flows From Financing Activities:
Payments for taxes related to net share settlement of equity awards	(2,101)	(539)
Proceeds from revolving loan	35,000	76,000
Payments on revolving loan	(28,000)	(60,000)
Repurchase and retirement of treasury stock	(6,264)	0
Payments of dividends	(4,245)	(4,425)
Net cash (used in) provided by financing activities	(5,610)	11,036
Effect of exchange rate changes on cash	(418)	722
Net decrease in cash and cash equivalents	(2,434)	(10,273)
Cash and cash equivalents at beginning of period	14,837	36,687
Cash and cash equivalents at end of period	12,403	26,414
Supplemental disclosures
Cash paid for interest	394	869
Cash paid for income taxes	$ 1,322	$ 11

Condensed Consolidated Statem_5

Condensed Consolidated Statement of Shareholders' Equity - 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. 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]
Share-based compensation expense	1,766		1,766
Common stock issued under stock-based plans and related income tax expense (shares)		47
Common stock issued under stock-based plans and related income tax expense	(539)	$ 47	(586)
Cash dividends 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)
Balance (shares) at Feb. 28, 2021		25,108
Balance at Feb. 28, 2021	623,292	$ 25,108	75,979	547,289	(25,084)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation expense	1,811		1,811
Common stock issued under stock-based plans and related income tax expense (shares)		89
Common stock issued under stock-based plans and related income tax expense	(2,101)	$ 89	(2,190)
Repurchase and retirement of treasury shares (shares)		126
Repurchase and retirement of treasury shares	(6,264)	$ (126)		(6,138)
Cash dividends paid	(4,245)			(4,245)
Net income	22,337			22,337
Foreign currency translation	2,581			(70)	2,651
Interest rate swap	0
Balance (shares) at May. 31, 2021		25,071
Balance at May. 31, 2021	$ 637,411	$ 25,071	$ 75,600	$ 559,173	$ (22,433)

The Company and Basis of Presen

The Company and Basis of Presentation	3 Months Ended
	May 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
The Company and 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 Infrastructure Solutions segment. AZZ Metal Coatings provides hot dip galvanizing, spin galvanizing, powder coating, anodizing and plating, and other metal coating applications to the steel fabrication and other industries through facilities located throughout the United States and Canada. AZZ Infrastructure Solutions is dedicated to delivering safe and reliable transmission of power from generation sources to end customers, and automated weld overlay solutions for corrosion and erosion mitigation to critical infrastructure in markets worldwide. Presentation The accompanying condensed consolidated balance sheet as of February 28, 2021 was derived from audited financial statements, and the unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. These financial statements should be read in conjunction with the audited financial statements and related notes for the fiscal year ended February 28, 2021, included in the Company’s Annual Report on Form 10-K covering such period. Certain previously reported amounts have been reclassified to conform to current period presentation. The Company's fiscal year ends on the last day of February and is identified as the fiscal year for the calendar year in which it ends. For example, the fiscal year ending February 28, 2022 is referred to as fiscal 2022. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, which are necessary to present fairly the financial position of the Company as of May 31, 2021, the results of its operations for the three months ended May 31, 2021 and 2020, and cash flows for the three months ended May 31, 2021 and 2020. The interim results reported herein are not necessarily indicative of results for a full year. Certain previously reported amounts have been reclassified to conform to current period presentation. Coronavirus (COVID-19) In March 2020, the World Health Organization declared the viral strain of coronavirus ("COVID-19") a global pandemic and recommended containment and mitigation measures worldwide. The spread of COVID-19 and the resulting economic contraction has resulted in increased business uncertainty. The Company continues to be impacted by the inability for its Infrastructure Solutions Industrial platform to access certain customer sites to perform services, temporary slow-downs in order placements in the Infrastructure Solutions Electrical platform, and increased costs associated with maintaining safe operations across the entire business. The Company has been able to remain open during the entirety of the pandemic to service its customers. 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 operations or statements of cash flows for fiscal year 2022 or beyond. Recently Adopted Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes ("ASU 2019-12") . This standard is intended to simplify the accounting and disclosure requirements for income taxes by eliminating various exceptions in accounting for income taxes as well as clarifying and amending existing guidance to improve consistency in the application of ASC 740. The standard was effective for the Company in the first quarter of its fiscal 2022. The Company adopted ASU 2019-12 in the first quarter of fiscal 2022 and the adoption did not have a material impact on its consolidated financial statements. Recently Issued Accounting Pronouncements In March 2020 and as clarified in January 2021, the FASB issued Accounting Standards Update No. (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective immediately for all entities. An entity may elect to apply the amendments on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date between March 12, 2020 and December 31, 2022. The Company adopted ASU 2020-04 in the first quarter of fiscal 2022 and the adoption did not have a material impact on its financial condition, results of operations, and cash flows.

Earnings Per Share

Earnings Per Share	3 Months Ended
	May 31, 2021
Earnings Per Share [Abstract]
Earnings Per Share	Earnings Per Share Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by giving effect to the potential dilution that could occur if stock awards vested and were converted into common shares during the period. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data): Three Months Ended May 31, 2021 2020 Numerator: Net income for basic and diluted earnings per common share $22,337 $5,541 Denominator: Denominator for basic earnings per common share–weighted average shares 25,051 26,157 Effect of dilutive securities: Employee and director equity awards 219 35 Denominator for diluted earnings per common share 25,270 26,192 Earnings per share basic and diluted: Basic income per common share $ 0.89 $ 0.21 Diluted income per common share $ 0.88 $ 0.21 For the three months ended May 31, 2021, 154,259 shares were excluded from the calculation of diluted EPS because the effect would be antidilutive. These shares could be dilutive in future periods.

Sales

Sales	3 Months Ended
	May 31, 2021
Revenues [Abstract]
Sales	Sales Disaggregated Sales The following table presents disaggregated sales by customer industry (in thousands): Three Months Ended May 31, 2021 2020 Sales: Industrial $ 153,983 $ 130,109 Transmission and distribution 43,667 49,057 Power generation 32,176 34,127 Total sales $ 229,826 $ 213,293 See Note 4 for sales information by segment. Contract Liabilities The following table shows the changes in contract liabilities for the three months ended May 31, 2021 and 2020, respectively (in thousands): 2021 2020 Balance at February 28/29, $ 16,138 $ 18,418 Contract liabilities added during the period 12,375 4,796 Sales recognized during the period (11,415) (5,849) Balance at May 31, $ 17,098 $ 17,365 The Company did not record any sales for the three months ended May 31, 2021 or 2020 related to performance obligations satisfied in prior periods. The increases or decreases in accounts receivable, contract assets, and contract liabilities during the three months ended May 31, 2021 and 2020 were due primarily to normal timing differences between the Company’s performance and customer payments in fiscal 2021. The Company expects to recognize sales, related to the $17.1 million balance of contract liabilities as of May 31, 2021 of approximately $12.1 million, $4.7 million, $0.2 million and $0.1 million in fiscal 2022, 2023, 2024 and 2025, respectively.

Segments

Segments	3 Months Ended
	May 31, 2021
Segment Reporting [Abstract]
Segments	Operating Segments Segment Information The Company has two distinct operating segments: the Metal Coatings segment and the Infrastructure Solutions segment. The Metal Coatings segment provides hot dip galvanizing, spin galvanizing, powder coating, anodizing and plating, and other metal coating applications to the steel fabrication and other industries through facilities located throughout the United States and Canada. Hot dip galvanizing is a metallurgical process in which molten zinc reacts to steel. The zinc alloying provides corrosion protection to fabricated steel for extended periods of up to 50 years. 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. Sales and operating income by segment for each period were as follows (in thousands): Three Months Ended May 31, 2021 2020 Sales: Metal Coatings $ 127,735 $ 118,991 Infrastructure Solutions 102,091 94,302 Total sales $ 229,826 $ 213,293 Operating income: Metal Coatings $ 31,576 $ 25,085 Infrastructure Solutions 9,624 (1,048) Corporate (10,488) (9,719) Total operating income $ 30,712 $ 14,318 Asset balances by segment for each period were as follows (in thousands): May 31, 2021 February 28, 2021 Total assets: Metal Coatings $ 490,326 $ 480,778 Infrastructure Solutions 521,428 489,986 Corporate 27,485 25,678 Total $ 1,039,239 $ 996,442 Financial Information About Geographical Areas The following table presents sales by geographic region for each period (dollars in thousands): Three Months Ended May 31, 2021 2020 Sales: United States $ 191,116 $ 190,842 International 38,710 22,451 Total $ 229,826 $ 213,293 The following table presents fixed assets by geographic region for each period (dollars in thousands): May 31, 2021 February 28, 2021 Property, plant and equipment, net: United States $ 180,004 $ 180,718 Canada 14,953 15,007 Other countries 12,732 10,184 Total $ 207,689 $ 205,909

Warranty Reserves

Warranty Reserves	3 Months Ended
	May 31, 2021
Product Warranties Disclosures [Abstract]
Warranty Reserves	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 established reserves and adjusts warranty estimates based upon the progression of resolution activities with the Company's customers. Warranties typically cover non-conformance to customer specifications or defects in material and workmanship. The following table shows the changes in the warranty reserves for the three months ended May 31, 2021 (dollars in thousands): Balance at February 28, 2021 $ 4,079 Warranty costs incurred (112) Additions charged to income 170 Balance at May 31, 2021 $ 4,137

Debt

Debt	3 Months Ended
	May 31, 2021
Debt Disclosure [Abstract]
Debt	Debt The Company's debt consisted of the following for each of the periods presented (dollars in thousands): May 31, 2021 February 28, 2021 2017 Revolving Credit Facility $ 36,000 $ 29,000 2020 Senior Notes 150,000 150,000 Total debt, gross 186,000 179,000 Unamortized debt issuance costs (565) (581) Total debt, net 185,435 178,419 Less amount due within one year — — Debt due after one year, net $ 185,435 $ 178,419 The Company's debt agreements require the Company to maintain certain financial ratios, of which the most restrictive is a debt to EBITDA leverage ratio of at least 3.25 to 1.00. As of May 31, 2021, the Company was in compliance with all covenants or other requirements set forth in the debt agreements.

Leases

Leases	3 Months Ended
	May 31, 2021
Leases [Abstract]
Leases	Leases The Company is a lessee under various operating leases for facilities and equipment. Supplemental information related to the Company's portfolio of operating leases was as follows (dollars in thousands): Three Months Ended May 31, 2021 2020 Operating cash flows from operating leases included in lease liabilities $ 2,299 $ 2,119 Lease liabilities obtained from new ROU assets - operating 12,661 204 Weighted-average remaining lease term - operating leases (years) 8.4 7.6 Weighted-average discount rate - operating leases 4.6 % 5.0 % Operating and financing cash flows from financing leases included in lease liabilities 18 — Lease liabilities obtained from new ROU assets - financing — — Weighted-average remaining lease term - financing leases (years) 4.3 — Weighted-average discount rate - financing leases 4.3 % — % The following table outlines the classification of lease expense in the statements of income (dollars in thousands): Three Months Ended May 31, 2021 2020 Cost of sales $ 2,546 $ 3,225 Selling, general and administrative 1,130 1,249 Total lease expense $ 3,676 $ 4,474 As of May 31, 2021, maturities of the Company's lease liabilities were as follows (dollars in thousands): Fiscal year: Operating Leases Finance Leases Total 2022 (remaining 9 months) $ 6,896 $ 53 $ 6,949 2023 8,709 71 8,780 2024 7,818 71 7,889 2025 6,777 68 6,845 2026 5,330 14 5,344 Thereafter 21,962 — 21,962 Total lease payments 57,492 277 57,769 Less imputed interest (9,872) (21) (9,893) Total $ 47,620 $ 256 $ 47,876

Income Taxes

Income Taxes	3 Months Ended
	May 31, 2021
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesThe Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws. With respect to the CARES Act, the Company benefited from the deferral of certain payroll taxes through the end of calendar year 2020 and the technical correction with respect to qualified improvement property.The provision for income taxes reflects an effective tax rate of 25.5% for the three months ended May 31, 2021, as compared to 45.8% for the respective prior year comparable period. The decrease in the effective tax rate was primarily attributable to the unfavorable impact of COVID-19 on book earnings in the prior year quarter compared to the current quarter ended May 31, 2021. The Company recorded discrete items in the first quarter of the prior year and the current year; however, since book income was significantly lower in the prior year, the effective tax rate was impacted more significantly by the discrete items.

Equity

Equity	3 Months Ended
	May 31, 2021
Equity [Abstract]
Equity	EquityOn 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 three months ended May 31, 2021, the Company repurchased 125,770 of its common shares in the amount of $6.3 million at an average purchase price of $49.80 under the 2020 Share Authorization.

Assets Held for Sale

Assets Held for Sale	3 Months Ended
	May 31, 2021
Discontinued Operations and Disposal Groups [Abstract]
Assets Held for Sale	Assets Held for Sale The Company has been executing a 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 metal coatings company . The historical annual sales, operating profit and net assets of these businesses were not significant enough to qualify as discontinued operations. Assets and liabilities allocated to the disposal group are as follows: As of May 31, 2021 Assets Accounts receivable $ 4,715 Inventories 2,600 Contract assets 2,204 Other current assets 186 Property, plant and equipment 1,348 Other assets 43 Goodwill 1,693 Liabilities Accounts payable 856 Contract liabilities 1,926 Other accrued liabilities 877 Lease liability – long term 12 Total carrying value 9,118 Less: Impairment of carrying value of remaining assets held for sale to estimated sales price (3,490) Fair value of disposal group $ 5,628

Commitment and Contingencies

Commitment and Contingencies	3 Months Ended
	May 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and ContingenciesLegalThe Company and its subsidiaries are named defendants and plaintiffs in various routine lawsuits incidental to our 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 in the normal course of 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 and potential mediation, our assessment of the likelihood of an unfavorable outcome on the pending lawsuits may change. Although 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, 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.

Subsequent Event

Subsequent Event	3 Months Ended
	May 31, 2021
Subsequent Events [Abstract]
Subsequent Event	Subsequent Event On July 8, 2021, the Company refinanced its current un-secured revolving credit facility, which was scheduled to mature in March 2022, with a new five-year un-secured revolving credit facility under that certain credit agreement, dated July 8, 2021 by and among 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 un-secured revolving credit facility with a principal amount of up to $400.0 million revolving loan commitments, and includes an additional $200.0 million uncommitted incremental accordion facility, ii. interest rate margin ranges from 87.5 bps to 175 bps for Eurodollar Rate loans, and from 0.0 bps to 75 bps for Base Rate loans, depending on leverage ratio of the Company and its consolidated subsidiaries as a group, iii. includes a letter of credit sub-facility up to $85.0 million for the issuance of standby and commercial letters of credit, iv. includes a $50.0 million sublimit for swing line loans, v. includes customary representations and warranties, affirmative covenants and negative covenants, and events of default, including restrictions on incurrence of non-ordinary course debt, investment and dividends, subject to various exceptions, carve-outs and baskets, and vi. includes a maximum leverage ratio financial covenant and an interest coverage ratio financial covenant, each to be tested at quarter end. The proceeds of the loans under the 2021 Credit Agreement will be used primarily to finance working capital needs, capital improvements, dividends, future acquisitions and general corporate purposes. The foregoing summary of certain terms and provisions of the 2021 Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the 2021 Credit Agreement, a copy of which is attached hereto as Exhibit 10.3 to this Form 10-Q and is incorporated herein by reference. .

The Company and Basis of Pres_2

The Company and Basis of Presentation (Policies)	3 Months Ended
	May 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
The Company and 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 Infrastructure Solutions segment. AZZ Metal Coatings provides hot dip galvanizing, spin galvanizing, powder coating, anodizing and plating, and other metal coating applications to the steel fabrication and other industries through facilities located throughout the United States and Canada. AZZ Infrastructure Solutions is dedicated to delivering safe and reliable transmission of power from generation sources to end customers, and automated weld overlay solutions for corrosion and erosion mitigation to critical infrastructure in markets worldwide. Presentation The accompanying condensed consolidated balance sheet as of February 28, 2021 was derived from audited financial statements, and the unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. These financial statements should be read in conjunction with the audited financial statements and related notes for the fiscal year ended February 28, 2021, included in the Company’s Annual Report on Form 10-K covering such period. Certain previously reported amounts have been reclassified to conform to current period presentation. The Company's fiscal year ends on the last day of February and is identified as the fiscal year for the calendar year in which it ends. For example, the fiscal year ending February 28, 2022 is referred to as fiscal 2022. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, which are necessary to present fairly the financial position of the Company as of May 31, 2021, the results of its operations for the three months ended May 31, 2021 and 2020, and cash flows for the three months ended May 31, 2021 and 2020. The interim results reported herein are not necessarily indicative of results for a full year. Certain previously reported amounts have been reclassified to conform to current period presentation.
Recently Adopted Accounting Pronouncements And Recently Issued Accounting Pronouncements	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. Recently Issued Accounting Pronouncements In March 2020 and as clarified in January 2021, the FASB issued Accounting Standards Update No. (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective immediately for all entities. An entity may elect to apply the amendments on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date between March 12, 2020 and December 31, 2022. The Company adopted ASU 2020-04 in the first quarter of fiscal 2022 and the adoption did not have a material impact on its financial condition, results of operations, and cash flows.

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	May 31, 2021
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, except per share data): Three Months Ended May 31, 2021 2020 Numerator: Net income for basic and diluted earnings per common share $22,337 $5,541 Denominator: Denominator for basic earnings per common share–weighted average shares 25,051 26,157 Effect of dilutive securities: Employee and director equity awards 219 35 Denominator for diluted earnings per common share 25,270 26,192 Earnings per share basic and diluted: Basic income per common share $ 0.89 $ 0.21 Diluted income per common share $ 0.88 $ 0.21

Sales (Tables)

Sales (Tables)	3 Months Ended
	May 31, 2021
Revenues [Abstract]
Disaggregation of Revenue	Disaggregated Sales The following table presents disaggregated sales by customer industry (in thousands): Three Months Ended May 31, 2021 2020 Sales: Industrial $ 153,983 $ 130,109 Transmission and distribution 43,667 49,057 Power generation 32,176 34,127 Total sales $ 229,826 $ 213,293
Contract with Customer, Asset and Liability	The following table shows the changes in contract liabilities for the three months ended May 31, 2021 and 2020, respectively (in thousands): 2021 2020 Balance at February 28/29, $ 16,138 $ 18,418 Contract liabilities added during the period 12,375 4,796 Sales recognized during the period (11,415) (5,849) Balance at May 31, $ 17,098 $ 17,365

Segments (Tables)

Segments (Tables)	3 Months Ended
	May 31, 2021
Segment Reporting [Abstract]
Schedule of Segment Reporting Information, by Segment	Sales and operating income by segment for each period were as follows (in thousands): Three Months Ended May 31, 2021 2020 Sales: Metal Coatings $ 127,735 $ 118,991 Infrastructure Solutions 102,091 94,302 Total sales $ 229,826 $ 213,293 Operating income: Metal Coatings $ 31,576 $ 25,085 Infrastructure Solutions 9,624 (1,048) Corporate (10,488) (9,719) Total operating income $ 30,712 $ 14,318
Reconciliation of Assets from Segment to Consolidated	Asset balances by segment for each period were as follows (in thousands): May 31, 2021 February 28, 2021 Total assets: Metal Coatings $ 490,326 $ 480,778 Infrastructure Solutions 521,428 489,986 Corporate 27,485 25,678 Total $ 1,039,239 $ 996,442
Revenue from External Customers by Geographic Areas	The following table presents sales by geographic region for each period (dollars in thousands): Three Months Ended May 31, 2021 2020 Sales: United States $ 191,116 $ 190,842 International 38,710 22,451 Total $ 229,826 $ 213,293
Long-lived Assets by Geographic Areas	The following table presents fixed assets by geographic region for each period (dollars in thousands): May 31, 2021 February 28, 2021 Property, plant and equipment, net: United States $ 180,004 $ 180,718 Canada 14,953 15,007 Other countries 12,732 10,184 Total $ 207,689 $ 205,909

Warranty Reserves (Tables)

Warranty Reserves (Tables)	3 Months Ended
	May 31, 2021
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, 2021 (dollars in thousands): Balance at February 28, 2021 $ 4,079 Warranty costs incurred (112) Additions charged to income 170 Balance at May 31, 2021 $ 4,137

Debt (Tables)

Debt (Tables)	3 Months Ended
	May 31, 2021
Debt Disclosure [Abstract]
Schedule of Debt	The Company's debt consisted of the following for each of the periods presented (dollars in thousands): May 31, 2021 February 28, 2021 2017 Revolving Credit Facility $ 36,000 $ 29,000 2020 Senior Notes 150,000 150,000 Total debt, gross 186,000 179,000 Unamortized debt issuance costs (565) (581) Total debt, net 185,435 178,419 Less amount due within one year — — Debt due after one year, net $ 185,435 $ 178,419

Leases (Tables)

Leases (Tables)	3 Months Ended
	May 31, 2021
Leases [Abstract]
Lease, Cost	Supplemental information related to the Company's portfolio of operating leases was as follows (dollars in thousands): Three Months Ended May 31, 2021 2020 Operating cash flows from operating leases included in lease liabilities $ 2,299 $ 2,119 Lease liabilities obtained from new ROU assets - operating 12,661 204 Weighted-average remaining lease term - operating leases (years) 8.4 7.6 Weighted-average discount rate - operating leases 4.6 % 5.0 % Operating and financing cash flows from financing leases included in lease liabilities 18 — Lease liabilities obtained from new ROU assets - financing — — Weighted-average remaining lease term - financing leases (years) 4.3 — Weighted-average discount rate - financing leases 4.3 % — % The following table outlines the classification of lease expense in the statements of income (dollars in thousands): Three Months Ended May 31, 2021 2020 Cost of sales $ 2,546 $ 3,225 Selling, general and administrative 1,130 1,249 Total lease expense $ 3,676 $ 4,474
Lessee, Operating Lease, Liability, Maturity	As of May 31, 2021, maturities of the Company's lease liabilities were as follows (dollars in thousands): Fiscal year: Operating Leases Finance Leases Total 2022 (remaining 9 months) $ 6,896 $ 53 $ 6,949 2023 8,709 71 8,780 2024 7,818 71 7,889 2025 6,777 68 6,845 2026 5,330 14 5,344 Thereafter 21,962 — 21,962 Total lease payments 57,492 277 57,769 Less imputed interest (9,872) (21) (9,893) Total $ 47,620 $ 256 $ 47,876

Assets Held for Sale (Tables)

Assets Held for Sale (Tables)	3 Months Ended
	May 31, 2021
Discontinued Operations and Disposal Groups [Abstract]
Disposal Groups, Including Discontinued Operations	Assets and liabilities allocated to the disposal group are as follows: As of May 31, 2021 Assets Accounts receivable $ 4,715 Inventories 2,600 Contract assets 2,204 Other current assets 186 Property, plant and equipment 1,348 Other assets 43 Goodwill 1,693 Liabilities Accounts payable 856 Contract liabilities 1,926 Other accrued liabilities 877 Lease liability – long term 12 Total carrying value 9,118 Less: Impairment of carrying value of remaining assets held for sale to estimated sales price (3,490) Fair value of disposal group $ 5,628

The Company and Basis of Pres_3

The Company and Basis of Presentation (Details)	3 Months Ended
	May 31, 2021segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segments	2

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	May 31, 2021	May 31, 2020
Numerator:
Net income for basic and diluted earnings per common share	$ 22,337	$ 5,541
Denominator:
Denominator for basic earnings per common share-weighted average shares (shares)	25,051	26,157
Effect of dilutive securities:
Employee and Director stock awards (shares)	219	35
Denominator for diluted earnings per common share (shares)	25,270	26,192
Earnings per share basic and diluted:
Basic earnings per common share (usd per share)	$ 0.89	$ 0.21
Diluted earnings per common share (usd per share)	$ 0.88	$ 0.21

Earnings Per Share - Narrative

Earnings Per Share - Narrative (Details) shares in Thousands	3 Months Ended
	May 31, 2021shares
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)	154,259

Sales Disaggregated Revenues (D

Sales Disaggregated Revenues (Details) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2021	May 31, 2020
Disaggregation of Revenue [Line Items]
Revenues	$ 229,826	$ 213,293
Industrial
Disaggregation of Revenue [Line Items]
Revenues	153,983	130,109
Transmission and distribution
Disaggregation of Revenue [Line Items]
Revenues	43,667	49,057
Power generation
Disaggregation of Revenue [Line Items]
Revenues	$ 32,176	$ 34,127

Sales Contract Liability (Detai

Sales Contract Liability (Details) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2021	May 31, 2020
Movement In Contract With Customer, Liability [Roll Forward]
Balance at February 28/29,	$ 16,138	$ 18,418
Contract liabilities added during the period	12,375	4,796
Sales recognized during the period	(11,415)	(5,849)
Balance at May 31,	$ 17,098	$ 17,365

Sales Future Revenues (Details)

Sales Future Revenues (Details) - USD ($) $ in Thousands	May 31, 2021	Feb. 28, 2021	May 31, 2020	Feb. 29, 2020
Revenues [Abstract]
Contract liabilities	$ 17,098	$ 16,138	$ 17,365	$ 18,418
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-06-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 12,100
Revenue, remaining performance obligation, expected timing of satisfaction, period	9 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-06-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 4,700
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-06-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 200
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-06-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 100
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year

Segments (Details)

Segments (Details) $ in Thousands	3 Months Ended
	May 31, 2021USD ($)segment	May 31, 2020USD ($)	Feb. 28, 2021USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | segment	2
Operations and assets by segment
Revenues	$ 229,826	$ 213,293
Operating income:	30,712	14,318
Total assets:	1,039,239		$ 996,442
Property, plant and equipment, net	207,689		205,909
United States
Operations and assets by segment
Revenues	191,116	190,842
Property, plant and equipment, net	180,004		180,718
International
Operations and assets by segment
Revenues	38,710	22,451
Canada
Operations and assets by segment
Property, plant and equipment, net	14,953		15,007
Other countries
Operations and assets by segment
Property, plant and equipment, net	12,732		10,184
Corporate
Operations and assets by segment
Operating income:	(10,488)	(9,719)
Total assets:	27,485		25,678
Metal Coatings | Operating Segments
Operations and assets by segment
Revenues	127,735	118,991
Operating income:	31,576	25,085
Total assets:	490,326		480,778
Infrastructure Solutions | Operating Segments
Operations and assets by segment
Revenues	102,091	94,302
Operating income:	9,624	$ (1,048)
Total assets:	$ 521,428		$ 489,986

Warranty Reserves (Details)

Warranty Reserves (Details) $ in Thousands	3 Months Ended
	May 31, 2021USD ($)
Movement in Standard Product Warranty Accrual [Roll Forward]
Opening Balance	$ 4,079
Warranty costs incurred	(112)
Additions charged to income	170
Closing Balance	$ 4,137

Debt (Details)

Debt (Details) - USD ($) $ in Thousands	May 31, 2021	Feb. 28, 2021
Debt Instrument [Line Items]
Total debt, gross	$ 186,000	$ 179,000
Unamortized debt issuance costs	(565)	(581)
Total debt, net	185,435	178,419
Debt due within one year	0	0
Debt due after one year, net	185,435	178,419
Senior Notes | 2020 Senior Notes
Debt Instrument [Line Items]
Total debt, gross	150,000	150,000
Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Total debt, gross	$ 36,000	$ 29,000

Debt - Narrative (Details)

Debt - Narrative (Details)	3 Months Ended
	May 31, 2021
Senior Notes | Line of Credit
Debt Instrument [Line Items]
Covenant, maximum leverage ratio	3.25

Leases - Lease Information (Det

Leases - Lease Information (Details) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2021	May 31, 2020
Leases [Abstract]
Operating cash flows from operating leases included in lease liabilities	$ 2,299	$ 2,119
Lease liabilities obtained from new ROU assets - operating	$ 12,661	$ 204
Weighted-average remaining lease term - operating leases (years)	8 years 4 months 24 days	7 years 7 months 6 days
Weighted-average discount rate - operating leases	4.60%	5.00%
Operating and financing cash flows from financing leases included in lease liabilities	$ 18
Lease liabilities obtained from new ROU assets - financing	$ 0
Weighted-average remaining lease term - financing leases (years)	4 years 3 months 18 days
Weighted-average discount rate - financing leases	4.30%

Leases - Lease Cost (Details)

Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2021	May 31, 2020
Lessee, Lease, Description [Line Items]
Total lease expense	$ 3,676	$ 4,474
Cost of sales
Lessee, Lease, Description [Line Items]
Total lease expense	2,546	3,225
Selling, general and administrative
Lessee, Lease, Description [Line Items]
Total lease expense	$ 1,130	$ 1,249

Leases - Lease Maturity (Detail

Leases - Lease Maturity (Details) $ in Thousands	May 31, 2021USD ($)
Operating Leases
2022 (remaining 9 months)	$ 6,896
2023	8,709
2024	7,818
2025	6,777
2026	5,330
Thereafter	21,962
Total lease payments	57,492
Less imputed interest	(9,872)
Total	47,620
Finance Leases
2022 (remaining 9 months)	53
2023	71
2024	71
2025	68
2026	14
Thereafter	0
Total lease payments	277
Less imputed interest	(21)
Total	256
2022 (remaining 9 months)	6,949
2023	8,780
2024	7,889
2025	6,845
2026	5,344
Thereafter	21,962
Total lease payments	57,769
Less imputed interest	(9,893)
Total	$ 47,876

Income Taxes (Details)

Income Taxes (Details)	3 Months Ended
	May 31, 2021	May 31, 2020
Income Tax Disclosure [Abstract]
Effective income tax rate (percent)	25.50%	45.80%

Equity (Details)

Equity (Details) - 2020 Share Repurchase Program - USD ($)	3 Months Ended
	May 31, 2021	Nov. 10, 2020
Equity, Class of Treasury Stock [Line Items]
Stock repurchase program authorized amount		$ 100,000,000
Repurchase of common stock (in shares)	125,770
Repurchase of common stock, value	$ 6,300,000
Shares repurchased, average price per share (in usd per share)	$ 49.80

Assets Held for Sale (Details)

Assets Held for Sale (Details) - Disposal Group, Held-for-sale, Not Discontinued Operations $ in Thousands	3 Months Ended
	May 31, 2021USD ($)
Assets
Accounts receivable	$ 4,715
Inventories	2,600
Contract assets	2,204
Other current assets	186
Property, plant and equipment	1,348
Other assets	43
Goodwill	1,693
Liabilities
Accounts payable	856
Contract liabilities	1,926
Other accrued liabilities	877
Lease liability – long term	12
Total carrying value	9,118
Less: Impairment of carrying value of remaining assets held for sale to estimated sales price	(3,490)
Fair value of disposal group	$ 5,628

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent Event $ in Millions	Jul. 08, 2021USD ($)
Minimum | Eurodollar
Subsequent Event [Line Items]
Line of credit facility, interest rate	0.875%
Minimum | Base Rate
Subsequent Event [Line Items]
Line of credit facility, interest rate	0.00%
Maximum | Eurodollar
Subsequent Event [Line Items]
Line of credit facility, interest rate	1.75%
Maximum | Base Rate
Subsequent Event [Line Items]
Line of credit facility, interest rate	0.75%
Revolving Credit Facility | 2021 Credit Agreement
Subsequent Event [Line Items]
Maximum borrowing capacity	$ 400
Accordion feature	200
Standby And Commercial Letters Of Credit | 2021 Credit Agreement
Subsequent Event [Line Items]
Accordion feature	85
Swing Line Loan | 2021 Credit Agreement
Subsequent Event [Line Items]
Accordion feature	$ 50