Discontinued Operations

3 Months Ended

May 31, 2023

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

3. Discontinued Operations

On September 30, 2022, AZZ contributed its AZZ Infrastructure Solutions segment, excluding AZZ Crowley Tubing ("AIS") to a joint venture, AIS Investment Holdings LLC (the "AVAIL JV") and sold a 60% interest in the AVAIL JV to Fernweh Group LLC ("Fernweh"). The divestiture was part of the Company's plan to divest of non-core businesses. On September 30, 2022, the AVAIL JV was deconsolidated. Beginning October 1, 2022, the Company's retained 40% interest in the AVAIL JV is included in the AZZ Infrastructure Solutions segment and is accounted for under the equity method of accounting.

The divestiture of the AZZ Infrastructure Solutions segment represents an intentional strategic shift in our operations and will allow the Company to become a focused provider of coating and galvanizing solutions for critical applications. As a result, the results of the AIS segment were classified as discontinued operations in our condensed statements of operations and excluded from both continuing operations and segment results for the three months ended May 31, 2022.

The results of operations from discontinued operations for the three months ended May 31, 2022, have been reflected as discontinued operations in the consolidated statements of operations and consist of the following (in thousands):

	Three Months Ended
		May 31, 2022
Sales		$	107,264
Cost of sales		82,861
Gross margin		24,403
Selling, general and administrative		12,402
Operating income from discontinued operations		12,001
Interest expense		1
Other (income) expense, net		825
Income from discontinued operations before income tax		11,175
Income tax expense		2,451
Net income from discontinued operations		$	8,724
Earnings per common share from discontinued operations:
Basic earnings per share		$	0.35
Diluted earnings per share		$	0.34

We have included the net cash provided by discontinued operations in the consolidated statements of cash flows. The depreciation, amortization, capital expenditures, and significant operating and investing non-cash items of the discontinued operations consist of the following (in thousands):

	Three Months Ended May 31, 2022
Depreciation and amortization	$	3,146
Purchase of property, plant and equipment	1,336
Loss on sale of property, plant and equipment	5