Restructuring and Impairment Charges

12 Months Ended

Feb. 28, 2021

Restructuring and Related Activities [Abstract]

Fiscal 2021

During fiscal 2021, the Company executed a plan to divest certain non-core businesses. The Company closed on the sale of its Galvabar business and its AZZ SMS, LLC ("SMS") business, and the board of directors approved a plan to divest certain other businesses within the Company. The Company recorded net proceeds of $8.3 million and a loss on the sale of the Galvabar business, which is included in the Metal Coatings segment, of $1.2 million. During fiscal 2021, the Company completed the sale of SMS, which is included in the Infrastructure Solutions segment, for net proceeds of $4.1 million. The Company recognized impairment charges of $0.9 million for SMS during the second quarter, and an additional loss on sale of $1.9 million during the third quarter of fiscal 2021. The loss of the sale of these businesses are included in "Restructuring and impairment charges" in the consolidated statements of income.

As of February 28, 2021, one additional business in the Infrastructure Solutions segment and one non-operating location in the Metal Coatings segment are classified as held for sale. The assets and liabilities of the businesses expected to be disposed of within the next twelve months are included in "Assets held for sale" in the accompanying consolidated balance sheet. In addition, the Company closed a small number of Metal Coatings locations that were in underperforming and lower growth geographies during fiscal 2021.

During fiscal 2021, the Company recognized certain charges related to the businesses sold, assets held for sale and assets that were abandoned, which are summarized in the table below:


	Year Ended February 28, 2021
	Metal Coatings		Infrastructure Solutions		Total
Write down of assets held for sale to estimated sales price	$	2,652	$	4,100	$	6,752
Write down of assets expected to be abandoned	6,923		—		6,923
Loss on sale of subsidiaries	1,221		1,859		3,080
Write down of excess inventory	—		2,511		2,511
Costs associated with assets held for sale	—		733		733
Total charges	$	10,796	$	9,203	$	19,999

Fiscal 2020

In February 2020, the Company completed the sale of its nuclear logistics business reported within its Infrastructure Solutions segment. The Company received net cash proceeds of $23.6 million and recognized a loss on disposal of $18.6 million, which is included in restructuring and impairment charges in the consolidated statements of income. The strategic decision to divest of the business reflects the Company's longer term strategy to focus on core businesses, markets and on its Metal Coatings segment. The historical annual sales, operating profit and net assets of the nuclear logistics business were not significant enough to qualify the sale as a discontinued operation. Goodwill was allocated to the disposal group on a relative fair value basis. The determination of the amount of goodwill to allocate to the disposal group required significant management judgment regarding future cash flows, discount rates and other market relevant data.

During fiscal year 2020, in conjunction with the divestiture of its nuclear logistics business, the Company exited from the nuclear certified portion of its industrial welding solutions business within the Infrastructure Solutions segment. In conjunction with this divestiture, the Company incurred impairment charges of $9.2 million, of which $2.0 million is included in cost of sales and $7.2 million is included in selling, general and administrative in the consolidated statement of income. The

impairment charges are related to certain intangible assets and nuclear specific property, plant and equipment that are no longer being utilized.

During fiscal year 2019, as part of the Company's ongoing efforts to eliminate redundancies in its Metal Coatings segment, the Company consolidated two galvanizing facilities located in the Gulf Coast region of the United States. As a result of the consolidation, the Company recognized restructuring and other related costs of $1.3 million in fiscal 2019, comprised of $0.8 million for fixed asset impairments and $0.5 million for employee severance and other disposal costs. All costs are included in cost of sales in the consolidated statement of income.

As of February 28, 2021 and February 29, 2020, the Company had no restructuring liabilities outstanding.

Assets Held for Sale

The strategic decision to divest both the Galvabar and SMS businesses reflects the Company's long-term strategy to focus on growth within its core businesses. The historical annual sales, operating profit and net assets of these two businesses were not significant enough to qualify as discontinued operations.

Assets and liabilities allocated to assets held for sale are as follows:


	February 28, 2021
Assets
Accounts receivable	$	2,435
Inventories	907
Contract assets	3,314
Other current assets	153
Property, plant and equipment	1,415
Other assets	42
Goodwill	1,693

Liabilities
Accounts payable	507
Contract liabilities	1,454
Other accrued liabilities	822
Lease liability – long term	2
Total carrying value	7,174
Less: Impairment of carrying value of remaining assets held for sale to estimated sales price	(3,490)
Fair value of disposal group	$	3,684