v3.25.2
Operating Segments
 3 Months Ended
May 31, 2025
Segment Reporting [Abstract]  
Operating Segments
6. Operating Segments
Segment Information
Our Chief Executive Officer, who is the chief operating decision maker ("CODM"), reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance. Sales and operating income are the primary measures used by the CODM to evaluate segment operating performance and to allocate resources to the AZZ Metal Coatings and the AZZ Precoat Metals segments. The CODM uses net income as the primary measure to evaluate performance and allocate resources to the AZZ Infrastructure Solutions segment. The CODM assesses these metrics and compares actuals to budgeted and forecasted values to evaluate segment operating performance and allocate resources to the operating segments. Expenses related to certain centralized administration or executive functions that are not specifically related to an operating segment are included in Corporate.
A summary of each of our operating segments is as follows:
AZZ Metal Coatings — provides hot-dip galvanizing, spin galvanizing, powder coating, anodizing and plating, and other metal coating applications to the steel fabrication industry and other industries through facilities located throughout North America. Hot-dip galvanizing is a metallurgical manufacturing process in which molten zinc reacts with steel, which provides corrosion protection and extends the lifecycle of fabricated steel for several decades.
AZZ Precoat Metals — provides coil coating application of protective and decorative coatings and related value-added downstream processing for steel and aluminum coils. Primarily serving the construction, appliance, heating, ventilation, and air conditioning (HVAC), container, transportation, and other end markets, the coil coating process emphasizes sustainability and enhanced product lifecycles. It involves cleaning, treating, painting, and curing metal coils as a flat material before they are cut,
formed, and fabricated into finished products. This highly efficient method optimizes waste through tight film control and improves final product performance by painting and curing the substrates under conditions unmatched by other application processes.
AZZ Infrastructure Solutions — consists of the equity in earnings of our 40% investment in the AVAIL JV, as well as other expenses directly related to AIS receivables and liabilities that were retained following the divestiture of the AIS business. The AVAIL JV is a global provider of application-critical equipment, highly engineered technologies, and specialized services to the power generation, transmission, distribution, oil and gas, and industrial markets.
The following tables contain operating segment data for the three months ended May 31, 2025 and 2024 by segment, for the Company's corporate operations and on a consolidated basis (in thousands):
Three Months Ended May 31, 2025
Metal CoatingsPrecoat Metals
Infrastructure Solutions(1)
Corporate(2)
Total
Sales$187,215 $234,747 $— $— $421,962 
Cost of sales(3)
130,356 187,476 — — 317,832 
Gross margin56,859 47,271 — — 104,130 
Selling, general and administrative(4)
6,127 7,917 80 20,457 34,581 
Operating income (loss)50,732 39,354 (80)(20,457)69,549 
Interest expense— — — (18,563)(18,563)
Equity in earnings of unconsolidated subsidiaries(5)
— — 173,523 — 173,523 
Other income (expense)(61)— — 1,388 1,327 
Income (loss) before income tax$50,671 $39,354 $173,443 (37,632)225,836 
Income tax expense54,928 54,928 
Net income (loss)$(92,560)$170,908 
Depreciation and amortization$6,660 $9,123 $— $6,044 $21,827 
See notes below tables.
Three Months Ended May 31, 2024
Metal CoatingsPrecoat Metals
Infrastructure Solutions(1)
Corporate(2)
Total
Sales$176,651 $236,557 $— $— $413,208 
Cost of sales122,735 187,803 — — 310,538 
Gross margin53,916 48,754 — — 102,670 
Selling, general and administrative5,984 8,660 29 18,248 32,921 
Operating income (loss)47,932 40,094 (29)(18,248)69,749 
Interest expense— — — (22,774)(22,774)
Equity in earnings of unconsolidated subsidiaries— — 3,824 — 3,824 
Other income56 — — 148 204 
Income (loss) before income tax$47,988 $40,094 $3,795 (40,874)51,003 
Income tax expense11,401 11,401 
Net income (loss)$(52,275)$39,602 
Depreciation and amortization$6,657 $7,593 $— $6,073 $20,323 
(1)
Infrastructure Solutions segment includes the equity in earnings from our investment in the AVAIL JV, as well as other expenses related to receivables and liabilities that were retained following the sale of the AIS business. See Note 18 for further discussion of the receivables and liabilities.
(2)
Interest expense and Income tax expense are included in the Corporate segment as these items are not allocated to the segments.
(3)
Metal Coatings segment includes restructuring charges of $3.8 million. See Note 17.
(4)
Includes stock-based compensation expense of $2.2 million, of which $0.4 million and $1.8 million are included in Metal Coatings and Corporate, respectively. See Note 15.
(5)
During the three months ended May 31, 2025, AVAIL completed the sale of the Electrical Products Group business to nVent Electric plc. Following the completion of the sale, we received a distribution of $273.2 million during the three months ended May 31, 2025, which is in excess of the investment in the AVAIL JV, which was $107.4 million as of May 31, 2025. The excess distribution of $165.8 million was recorded as equity in earnings of unconsolidated entities during the three months ended May 31, 2025. See Note 7.
Asset balances by operating segment for each period were as follows (in thousands):
As of
Assets:May 31, 2025February 28, 2025
Metal Coatings$569,103 $555,095 
Precoat Metals1,567,108 1,548,377 
Infrastructure Solutions - Investment in Joint Venture(1)
— 99,379 
Corporate22,974 24,250 
Total assets$2,159,185 $2,227,101 
(1) See Note 7 for information regarding the Investment in AVAIL joint venture.
Financial Information About Geographical Areas
Financial information about geographical areas for the periods presented was as follows (in thousands). The geographic area is based on the location of the operating facility and no customer accounted for 10% or more of consolidated sales.
Three Months Ended May 31,
Sales:20252024
United States$410,995 $403,051 
Canada10,967 10,157 
Total sales$421,962 $413,208 
As of
May 31, 2025February 28, 2025
Property, plant and equipment, net:
United States$578,505 $574,332 
Canada19,387 18,609 
Total property, plant and equipment, net$597,892 $592,941