Leases

12 Months Ended

Feb. 28, 2026

9. Leases

We are a lessee under various leases for facilities and equipment. See Note 1 for a description of our accounting policy for leases.

As of February 28, 2026, we were the lessee for 145 operating leases and 139 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 February 28, 2026 do not reflect all of our short-term lease commitments.

In January 2026, we executed a 20-year extension of a leased facility in Columbia, South Carolina, which resulted in a remeasurement of the related lease liability and right-of-use asset in accordance with ASC 842, Lease Accounting. As a result, we recorded an increase of $28.6 million to "Right-of-use assets" and "Lease liability—long-term" on the consolidated balance sheets.

The following table outlines the classification of right-of-use ("ROU") assets and lease liabilities in the consolidated balance sheets for fiscal 2026 and 2025 (in thousands):


		As of
		February 28, 2026		February 28, 2025
Assets	Balance Sheet Classification
Operating right-of-use assets	Right-of-use assets	$	46,261	$	19,471
Finance right-of-use assets	Right-of-use assets	$	13,303	$	6,480
Liabilities
Operating lease liabilities―short-term	Lease liability—short-term	$	5,413	$	6,373
Operating lease liabilities―long-term	Lease liability—long-term	$	41,489	$	13,741
Finance lease liabilities―short-term	Lease liability—short-term	$	3,266	$	1,376
Finance lease liabilities―long-term	Lease liability—long-term	$	10,480	$	5,271

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


	As of
	February 28, 2026			February 28, 2025
Operating cash flows from operating leases included in lease liabilities	$	7,592		$	7,213
Lease liabilities obtained from new ROU assets—operating leases	$	32,800		$	6,073
Weighted-average remaining lease term—operating leases	14.71 years			3.79 years
Weighted-average discount rate—operating leases	6.10		%	5.06		%
Decrease in ROU assets related to lease terminations	$	(856)		$	—
Financing cash flows from finance leases included in lease liabilities	$	2,542		$	988
Operating cash flows from finance leases included in lease liabilities	$	787		$	341
Lease liabilities obtained from new ROU assets—finance leases	$	9,105		$	3,781
Weighted-average remaining lease term—finance leases	4.01 years			4.57 years
Weighted-average discount rate—finance leases	6.59		%	6.86		%

The weighted-average remaining lease term for operating leases increased to 14.71 years, primarily due to the 20-year extension of the Columbia facility lease executed during fiscal 2026.

The following table outlines our lease expense in the consolidated statements of operations for fiscal 2026, 2025, and 2024 (in thousands):


	Year Ended
	February 28, 2026		February 28, 2025		February 29, 2024
Operating lease expense:
Cost of sales	$	7,233	$	6,117	$	6,008
Selling, general and administrative	1,975		1,932		1,947
Total operating lease expense	9,208		8,049		7,955
Financing lease expense:
Cost of sales	2,839		1,117		468
Interest expense	787		341		109
Total financing lease expense	3,626		1,458		577
Variable lease expense:
Cost of sales	945		471		454

Total variable lease expense	945		471		454
Short-term lease expense:
Cost of sales	6,254		6,402		5,416
Selling, general and administrative	117		33		52
Total short-term lease expense	6,371		6,435		5,468
Total lease expense	$	20,150	$	16,413	$	14,454

As of February 28, 2026, maturities of our lease liabilities were as follows (in thousands):


Fiscal year:	Operating Leases		Finance Leases		Total
2027	$	8,054	$	4,051	$	12,105
2028	7,194		3,954		11,148
2029	6,510		3,721		10,231
2030	4,468		3,027		7,495
2031	3,609		828		4,437

Thereafter	44,672		3		44,675
Total lease payments	74,507		15,584		90,091
Less imputed interest	(27,605)		(1,838)		(29,443)
Total	$	46,902	$	13,746	$	60,648

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."


	Year Ended
	February 28, 2026		February 28, 2025		February 29, 2024
Sublease income	$	1,063	$	1,055	$	1,002