Leases

9 Months Ended

Nov. 30, 2025

12. Leases

We are a lessee under various leases for facilities and equipment. As of November 30, 2025, we were the lessee for 128 operating leases and 117 finance leases with terms of 12 months or more. These leases are reflected in "Right-of-use assets," "Lease liability—short-term" and "Lease liability—long-term" in our consolidated balance sheets.

Our leases are primarily for (i) operating facilities, (ii) vehicles and equipment used in operations, (iii) facilities used for back-office functions, (iv) equipment used for back-office functions, and (v) temporary storage. The majority of our vehicle and equipment leases have both a fixed and variable component.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets and we recognize lease expense for these leases on a straight-line basis over the lease term. We have a significant number of short-term leases, including month-to-month agreements. Our short-term lease agreements include expenses incurred hourly, daily, monthly and for other durations of time of one year or less. Our future lease commitments as of November 30, 2025, do not reflect all of our short-term lease commitments.

The following table outlines the classification of right-of-use ("ROU") assets and lease liabilities in the consolidated balance sheets as of November 30, 2025 and February 28, 2025 (in thousands):


		As of
		November 30, 2025		February 28, 2025
Assets	Balance Sheet Classification
Operating right-of-use assets	Right-of-use assets	$	17,365	$	19,471
Finance right-of-use assets	Right-of-use assets	13,575		6,480
Liabilities
Operating lease liabilities―short-term	Lease liability—short-term	6,377		6,373
Operating lease liabilities―long-term	Lease liability—long-term	11,555		13,741
Finance lease liabilities―short-term	Lease liability—short-term	3,124		1,376
Finance lease liabilities―long-term	Lease liability—long-term	10,807		5,271

Supplemental information related to our leases was as follows (in thousands, except years and percentages):


	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Operating cash flows from operating leases included in lease liabilities	$	1,917	$	1,867	$	5,650	$	5,426
Lease liabilities obtained from new ROU assets—operating leases	1,098		5,345		3,068		5,979
Decrease in ROU assets related to lease terminations	(8)		—		(621)		—
Operating cash flows from finance leases included in lease liabilities	219		86		559		237
Financing cash flows from finance leases included in lease liabilities	713		257		1,751		689
Lease liabilities obtained from new ROU assets—finance leases	2,743		394		9,367		1,813


	As of
	November 30, 2025		February 28, 2025
Weighted-average remaining lease term—operating leases	3.59 years		3.79 years
Weighted-average discount rate—operating leases	5.21	%	5.06	%
Weighted-average remaining lease term—finance leases	4.21 years		4.57 years
Weighted-average discount rate—finance leases	6.60	%	6.86	%

The following table outlines the classification of lease expense related to operating and finance leases in the statements of operations (in thousands):


	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Operating lease expense:
Cost of sales	$	2,142	$	1,625	$	5,466	$	4,546
Selling, general and administrative	419		475		1,504		1,442
Total operating lease expense	2,561		2,100		6,970		5,988
Financing lease expense:
Cost of sales	789		288		1,960		779
Interest expense	219		86		559		237
Total financing lease expense	1,008		374		2,519		1,016
Variable lease expense:
Cost of sales	220		113		684		359

Total variable lease expense	220		113		684		359
Short-term lease expense:
Cost of sales	770		1,627		4,441		4,490
Selling, general and administrative	74		6		77		16
Total short-term lease expense	844		1,633		4,518		4,506
Total lease expense	$	4,633	$	4,220	$	14,691	$	11,869

As of November 30, 2025, maturities of our lease liabilities were as follows (in thousands):


Fiscal year:	Operating Leases		Finance Leases		Total
2026	$	1,891	$	987	$	2,878
2027	6,465		3,908		10,373
2028	4,439		3,812		8,251
2029	3,732		3,581		7,313
2030	1,719		2,886		4,605
2031	871		711		1,582
Thereafter	524		3		527
Total lease payments	19,641		15,888		35,529
Less imputed interest	(1,709)		(1,957)		(3,666)
Total	$	17,932	$	13,931	$	31,863

We sublease multiple buildings in Columbia, South Carolina to multiple subtenants. The Columbia sublease agreements are by and between AZZ Precoat Metals and multiple subtenants. Sublease income is recognized over the term of the sublease on a straight-line basis and is reported in the consolidated statement of operations as a reduction to "Cost of sales." Sublease income for the three and nine months ended November 30, 2025 and 2024 was as follows (in thousands):


	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Sublease income	$	266	$	266	$	797	$	789