We are a lessee under various leases for facilities and equipment. As of May 31, 2025, we were the lessee for 125 operating leases and 103 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 May 31, 2025 do not reflect all of our short-term lease commitments.

The following table outlines the classification of right-of-use ("ROU") asset and lease liabilities in the consolidated balance sheets as of May 31, 2025 and February 28, 2025 (in thousands):


		As of
		May 31, 2025		February 28, 2025
Assets	Balance Sheet Classification
Operating right-of-use assets	Right-of-use assets	$	17,596	$	19,471
Finance right-of-use assets	Right-of-use assets	9,948		6,480
Liabilities
Operating lease liabilities ― short-term	Lease liability - short-term	6,089		6,373
Operating lease liabilities ― long-term	Lease liability - long-term	12,122		13,741
Finance lease liabilities ― short-term	Lease liability - short-term	2,115		1,376
Finance lease liabilities ― long-term	Lease liability - long-term	8,046		5,271


	Three Months Ended May 31,
	2025		2024
Operating cash flows from operating leases included in lease liabilities	$	1,881	$	1,779
Lease liabilities obtained from new ROU assets - operating	16		217
Decrease in ROU assets related to lease terminations	(467)		—
Operating cash flows from finance leases included in lease liabilities	142		68
Financing cash flows from finance leases included in lease liabilities	434		196
Lease liabilities obtained from new ROU assets - finance leases	4,127		410


	As of
	May 31, 2025		February 28, 2025
Weighted-average remaining lease term - operating leases	3.61 years		3.79 years
Weighted-average discount rate - operating leases	5.07	%	5.06	%
Weighted-average remaining lease term - finance leases	4.38 years		4.57 years
Weighted-average discount rate - finance leases	6.90	%	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 May 31,
	2025		2024
Operating lease expense:
Cost of sales	$	1,829	$	1,432
Selling, general and administrative	508		480
Total operating lease expense	2,337		1,912
Financing lease expense:
Cost of sales	487		223
Interest expense	142		68
Total financing lease expense	629		291
Variable lease expense:
Cost of sales	249		113

Total variable lease expense	249		113
Short-term lease expense:
Cost of sales	1,802		1,458
Selling, general and administrative	5		9
Total short-term lease expense	1,807		1,467
Total lease expense	$	5,022	$	3,783


Fiscal year:	Operating Leases		Finance Leases		Total
2026	$	5,206	$	2,051	$	7,257
2027	5,713		2,713		8,426
2028	3,766		2,618		6,384
2029	3,128		2,413		5,541
2030	1,207		1,741		2,948
2031	540		219		759
Thereafter	363		3		366
Total lease payments	19,923		11,758		31,681
Less imputed interest	(1,712)		(1,597)		(3,309)
Total	$	18,211	$	10,161	$	28,372

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 months ended May 31, 2025 and 2024 was as follows (in thousands):