Segments

9 Months Ended

Nov. 30, 2022

Segment Reporting [Abstract]

Segments

Segment Information

The Company has three distinct operating segments: the AZZ Metal Coatings segment, the AZZ Precoat Metals segment and the AZZ Infrastructure Solutions segment. The AIS Joint Venture agreement discussed in Note 3 resulted in our AZZ Infrastructure Solutions segment being classified within discontinued operations, with the exception of AZZ Crowley Tubing which was retained by the Company and merged into the AZZ Metal Coatings segment. See Note 3 for the results of operations related to the AZZ Infrastructure Solutions segment. For the three and nine months ended November 30, 2022, the Company's investment in the AIS JV is a reportable operating segment.

The AZZ 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 and extends the life-cycle of fabricated steel for several decades. The Tubing business provides small-diameter offset pipe utilized primarily in the energy sector.

The AZZ Precoat Metals segment provides aesthetic and corrosion protective coatings and related value-added services for steel and aluminum coil, primarily serving the construction; appliance; heating, ventilation, and air conditioning (HVAC); container; transportation and other end markets in the United States.

The AZZ Infrastructure Solutions segment consists of the Company's investment in and equity in earnings of the AIS JV, which 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. The AIS JV 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 from continuing operations by segment for each period were as follows (in thousands):

	Three Months Ended November 30,				Nine Months Ended November 30,
	2022		2021		2022		2021
Sales:
AZZ Metal Coatings	$	158,274	$	135,083	$	487,567	$	395,732
AZZ Precoat Metals	215,027		—		499,578		—
Total sales	$	373,301	$	135,083	$	987,145	$	395,732
Operating income:
AZZ Metal Coatings	$	33,546	$	33,111	$	123,812	$	97,072
AZZ Precoat Metals	21,053		—		63,914		—
Corporate(1)	(9,206)		(11,821)		(50,283)		(34,395)
Total operating income from continuing operations	$	45,393	$	21,290	$	137,443	$	62,677
(1) Includes expenditures of $15.2 million for the nine months ended November 30, 2022, directly related to the Precoat Acquisition and the divestiture of the AZZ Infrastructure Solutions operating segment. There were no such expenditures for the three months ended November 30, 2022.

Asset balances by operating segment for each period were as follows (in thousands):

	November 30, 2022		February 28, 2022
Total assets:
AZZ Metal Coatings	$	579,830	$	578,885
AZZ Precoat Metals	1,484,074		—
AZZ Infrastructure Solutions - Investment in Joint Venture	82,420		—
Corporate	53,150		46,266
Discontinued operations:
AZZ Infrastructure Solutions	—		507,876
Total	$	2,199,474	$	1,133,027

Financial Information About Geographical Areas

The following table presents sales by geographic region for each period (in thousands):

	Three Months Ended November 30,				Nine Months Ended November 30,
	2022		2021		2022		2021
Sales:
United States	$	363,660	$	127,462	$	951,855	$	370,910
International	9,641		7,621		35,290		24,822
Total	$	373,301	$	135,083	$	987,145	$	395,732

The following table presents fixed assets by geographic region for each period (in thousands):

	November 30, 2022		February 28, 2022
Property, plant and equipment, net:
United States	$	471,279	$	167,634
Canada	20,088		25,724
Total	$	491,367	$	193,358

Investments in Unconsolidated Entity

On September 30, 2022, the Company entered into a joint venture with Fernweh Group LLC ("Fernweh"), whereby AZZ contributed its AZZ Infrastructure Solutions segment (“AIS”) to AIS Investment Holdings LLC (the “AIS JV”), and sold a 60% interest in the AIS JV to Fernweh. The Company's investment in the AIS JV was $82.4 million at November 30, 2022. The Company recognized equity in earnings of unconsolidated entities of $1.0 million for the three and nine months ended November 30, 2022. See Note 7 for further discussion of the Company's investment in the AIS JV.