Restructuring and Impairment Charges

12 Months Ended

Feb. 28, 2022

Restructuring and Related Activities [Abstract]

Fiscal 2022

During fiscal 2022, the Company continued to execute it's plan to divest certain non-core business, which was approved by the board of directors in fiscal 2021. During the fourth quarter of fiscal 2022, the Company had a change to the plan of sale for one of its businesses in the Infrastructure Solutions segment. The Company recognized $3.9 million of impairment charges related to this business during fiscal 2021, which are included in in "Restructuring and impairment charges" in the consolidated statements of income. During fiscal 2022, the Company reclassified the business from assets held for sale to assets held and used. When there is a change to a plan of sale and the assets are reclassified from held for sale to held and used, the long-lived assets are reported at the lower of (i) the carrying amount before held for sale designation, adjusted for depreciation that would have been recognized if the assets had not been classified as held for sale, or (ii) the fair value at the date the assets no longer satisfy the criteria for classification as held for sale. Following an analysis of the long-lived assets for the business, the Company reversed a portion of the previously recognized impairment charges, and recognized income of $1.8 million in fiscal 2022 as a result of the change to the plan of sale, which is included in "Restructuring and Impairment charges" in the consolidated statements of operations. In addition, $1.7 million of the impairment charges recognized in fiscal 2021 was allocated to goodwill, reducing the goodwill allocated to this business to zero.

The remaining assets and liabilities related to the business reclassified to assets held and used have been reclassified to the appropriate asset and liability accounts in the consolidated balance sheet. The following table shows the assets and liabilities related to this business as reported, adjustments to reclassify the asset to assets held and used, and the adjusted amounts, as of February 28, 2021:


	As of February 28, 2021
	As Reported		Adjustments		As Adjusted
Assets
Accounts receivable	$	128,127	$	638	$	128,765
Inventories	92,912		907		93,819
Contract assets	58,056		3,314		61,370
Other current assets	5,876		153		6,029
Assets held for sale	3,684		(3,449)		235
Property, plant and equipment	205,909		1,180		207,089
Intangibles and other assets, net	91,390		42		91,432
Total	$	585,954	$	2,785	$	588,739

Liabilities
Accounts payable	$	41,034	$	508	$	41,542
Other accrued liabilities	27,136		509		27,645
Contract liabilities	16,138		1,735		17,873
Lease liability, short-term	6,588		31		6,619
Lease liability, long-term	32,629		2		32,631
Total	$	123,525	$	2,785	$	126,310

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.

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.

As of February 28, 2022 and February 28, 2021, 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.

As of February 28, 2022, one non-operating location in the Metal Coatings segment is classified as held for sale. The assets of the business include property, plant and equipment of $0.2 million, are expected to be disposed of within the next twelve months and are included in "Assets held for sale" in the accompanying consolidated balance sheets.