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What changed in AZZ INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of AZZ INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+240 added−279 removedSource: 10-K (2025-04-21) vs 10-K (2024-04-22)

Top changes in AZZ INC's 2025 10-K

240 paragraphs added · 279 removed · 195 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

30 edited+4 added−8 removed28 unchanged
Biggest changeMackey 54 Chief Legal Officer and Secretary 2014 Matt Emery 57 Chief Information and Human Resource Officer 2013 Tiffany Moseley 52 Chief Accounting Officer Vice President, Business Risk Management - Valero Energy Corporation, a manufacturer of transportation fuels and petrochemical products 2023 2019-2021 Chris Bacius 63 Vice President, Business Development 2014 David Nark 56 Senior Vice President of Marketing, Communications and Investor Relations Vice President of Marketing and Communications 2019 2013-2019 Bryan Stovall 59 Chief Operating Officer – Metal Coatings President - AZZ Galvanizing Solutions Senior Vice President - Metal Coatings 2020 2019 2018-2019 Kurt Russell 54 Chief Operating Officer - Precoat Metals President - Precoat Metals Division of Sequa Corporation, a portfolio company owned by Carlyle, a global private equity firm 2022 2016-2022 Each executive officer was elected by the Board of Directors to hold office until the next annual meeting of shareholders or until their successor is elected.
Biggest changeMackey 55 Chief Legal Officer and Secretary 2014 Chris Bacius 64 Vice President, Business Development 2014 David Nark 57 Chief Marketing, Communications and Investor Relations Officer Vice President of Marketing and Communications 2019 2013-2019 Bryan Stovall 60 Chief Operating Officer — Metal Coatings President — AZZ Galvanizing Solutions Senior Vice President — Metal Coatings 2020 2019 2018-2019 Jeffrey Vellines 51 President and Chief Operating Officer — Precoat Metals President — Precoat Metals Senior Vice President of Commercial Operations — Precoat Metals Vice President of Sales — Precoat Metals 2025 2024 2021-2024 2013-2021 Kurt Russell 55 Chief Strategy Officer Chief Operating Officer — Precoat Metals President — Precoat Metals 2025 2022 2016-2022 Each executive officer was elected by the Board of Directors to hold office until the next annual meeting of shareholders or until their successor is elected.
AIS Investment Holdings LLC is primarily dedicated to delivering safe and reliable transmission of power from generation sources to end customers, automated weld overlay solutions for corrosion and erosion mitigation to critical infrastructure in markets worldwide.
AIS Investment Holdings LLC is primarily dedicated to delivering safe and reliable transmission of power from generation sources to end customers, and automated weld overlay solutions for corrosion and erosion mitigation to critical infrastructure in markets worldwide.
We strive to provide high quality manufactured solutions to our customers while delivering long-term value to our shareholders by: 3 Table of Contents • Integrating human capital, diversity and environmental initiatives into our operations and corporate culture; • Ensuring shareholder engagement is embedded into developing and executing on AZZ’s strategic goals; • Driving profitable growth in both AZZ Metal Coatings and AZZ Precoat Metals segments; and • Targeting increased capital returns to shareholders.
We strive to provide high quality manufactured solutions to our customers while delivering long-term value to our shareholders by: • Integrating human capital, diversity and environmental initiatives into our operations and corporate culture; • Ensuring shareholder engagement is embedded into developing and executing on AZZ’s strategic goals; • Driving profitable growth in our AZZ Metal Coatings and AZZ Precoat Metals segments; and 3 Table of Contents • Targeting increased capital returns to shareholders.
We offer annual merit-based increases, as well as annual short- and long-term incentive packages that are aligned with the Company’s vision and key business objectives and are intended to motivate strong performance. We believe our employees are critical to the success of our business and we structure our benefits package to attract and retain a highly talented and engaged workforce.
We offer annual merit-based increases, as well as annual short- and long-term incentive packages that are aligned with our vision and key business objectives and are intended to motivate strong performance. We believe our employees are critical to the success of our business and we structure our benefits package to attract and retain a highly talented and engaged workforce.
We have three distinct operating segments: the AZZ Metal Coatings segment, the AZZ Precoat Metals segment, and the AZZ Infrastructure Solutions segment. Our AZZ Metal Coatings segment is a leading provider of metal finishing solutions for corrosion protection, including hot-dip galvanizing, spin galvanizing, powder coating, anodizing and plating to the North American steel fabrication industry and other industries.
We have three distinct operating segments: the AZZ Metal Coatings segment, the AZZ Precoat Metals segment, and the AZZ Infrastructure Solutions segment. Our AZZ Metal Coatings segment is a leading provider of metal coating solutions for corrosion protection, including hot-dip galvanizing, spin galvanizing, powder coating, anodizing and plating to the North American steel fabrication industry and other industries.
Resources Zinc, the principal raw material used in the galvanizing process, is currently readily available, but can be subject to volatile pricing. We manage our exposure to changes in the price of zinc by entering into agreements with our zinc suppliers and such agreements generally include fixed premiums.
Resources Zinc, the principal raw material used in the galvanizing process, is currently readily available, but can be subject to volatile pricing. We manage our exposure to changes in our cost of zinc by entering into agreements with our zinc suppliers and such agreements generally include fixed premiums.
Financial Statements and Supplementary Data—Note 18." AZZ Infrastructure Solutions segment AZZ's Infrastructure Solutions segment consists of the equity in earnings of the Company's 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.
Financial Statements and Supplementary Data—Note 18." AZZ Infrastructure Solutions Segment AZZ's Infrastructure Solutions segment 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.
We intend to disclose future amendments to, or waivers from, certain provisions of the Code of Conduct on our website. You may also obtain a copy of these documents by mailing a request to: AZZ Inc. Investor Relations One Museum Place, Suite 500 3100 West 7th Street Fort Worth, TX 76107
We intend to disclose future amendments to, or waivers from, certain provisions of the Code of Conduct on our website. 8 Table of Contents You may also obtain a copy of these documents by mailing a request to: AZZ Inc. Investor Relations One Museum Place, Suite 500 3100 West 7th Street Fort Worth, TX 76107
Our programs vary by location, but most include the following benefits: 6 Table of Contents Health Financial Work/Life Medical, Dental and Vision Competitive Base Salaries Company/Voluntary Life Insurance Medical Insurance Premium Reduction Hourly Overtime and Shift Differential Pay Compensated Time Off and Holiday Pay Health Screenings Cash Incentive Program (annual) Accidental Death & Dismemberment Prescription Drug Coverage Employee Stock Purchase Plan Paid Short-Term and Long-Term Disability 24/7/365 Virtual and Telehealth Services 100% 401(k) match for the first 1% and 50% match between 2% and 6% Flexible Work Arrangements Annual Flu Immunizations Pre-tax Contributions to Eligible Savings Accounts Family Emergency Leave Employee Assistance Program Tuition reimbursement Military Leave Growth and Development We invest in and provide ongoing development and continuous learning opportunities for all of our employees.
Our programs vary by location, but most include the following benefits: Health Financial Work/Life Medical, Dental and Vision Competitive Base Salaries Company/Voluntary Life Insurance Medical Insurance Premium Reduction Hourly Overtime and Shift Differential Pay Compensated Time Off and Holiday Pay Health Screenings Cash Incentive Program (annual) Accidental Death & Dismemberment Prescription Drug Coverage Employee Stock Purchase Plan Paid Short-Term and Long-Term Disability 24/7/365 Virtual and Telehealth Services Pre-tax Contributions to Eligible Savings Accounts Flexible Work Arrangements Annual Flu Immunizations 401(k) match up to 4% Family Emergency Leave Employee Assistance Program Tuition reimbursement Military Leave Growth and Development 6 Table of Contents We invest in and provide ongoing development and continuous learning opportunities for all of our employees.
The AZZ Precoat Metals segment provides aesthetic and corrosion protective coatings and related value-added services for steel and aluminum coil, primarily serving the construction; appliance; heating, ventilation, and air conditioning (HVAC); container; transportation and other end markets in North America. The AZZ Infrastructure Solutions segment consists of our 40% interest in AIS Investment Holdings LLC (the "AVAIL JV").
The AZZ Precoat Metals segment provides aesthetic and corrosion protective coatings and related value-added services for steel and aluminum coil, primarily serving the construction; appliance; heating, ventilation, and air conditioning (HVAC); container; transportation and other end markets in North America. The AZZ Infrastructure Solutions segment represents our 40% non-controlling interest in AIS Investment Holdings LLC (the "AVAIL JV").
This principle is incorporated into each of the Company's policies and procedures relating to recruitment, hiring, promotions, compensation, benefits, discipline, termination and all of AZZ’s other terms and conditions of employment. We seek to continuously improve our hiring, development, advancement and retention of diverse talent and our overall diversity representation.
This principle is incorporated into each of our policies and procedures relating to recruitment, hiring, promotions, compensation, benefits, discipline, termination and all of our terms and conditions of employment. We seek to continuously improve our hiring, development, advancement and retention of diverse talent and our overall diversity representation.
We primarily serve distributors, fabricators and manufacturers that ultimately provide manufactured painted products to the construction, appliance, HVAC, transportation, container, and general industrial markets, as well as numerous original equipment manufacturers.
We primarily serve distributors, fabricators and manufacturers that ultimately provide manufactured painted products to the construction, appliance, HVAC, transportation, container, and general industrial markets, as well as numerous original 4 Table of Contents equipment manufacturers.
In fiscal year 2024, we continued to demonstrate excellence in safety across our 61 plants worldwide, and incident rates as indicated below: TRIR LTIR DART AZZ Metal Coatings Segment 3.28 1.15 2.22 AZZ Precoat Metals Segment 2.03 0.68 0.90 7 Table of Contents Information About Our Executive Officers The names, ages, and experience of our executive officers as of April 22, 2024 are as follows: Name Age Business Experience of Executive Officers for Past Five Years Position or Office with Registrant or Prior Employer Held Since Thomas E.
In fiscal year 2025, we continued to demonstrate excellence in safety across our 61 plants worldwide, and incident rates as indicated below: TRIR LTIR DART AZZ Metal Coatings Segment 2.06 0.70 1.25 AZZ Precoat Metals Segment 2.51 0.15 0.52 Information About Our Executive Officers The names, ages, and experience of our executive officers as of April 21, 2025 are as follows: 7 Table of Contents Name Age Business Experience of Executive Officers for Past Five Years Position or Office with Registrant or Prior Employer Held Since Thomas E.
Equal Opportunity Employment is a fundamental principle of our Company, where employment and applications for employment are evaluated based upon a person’s capabilities and qualifications without discrimination based on actual or perceived race, color, religion, sex, age, national origin, disability, genetic information, marital status, veteran status, sexual orientation, or any other protected characteristic as established by applicable local, state, federal or international laws.
Everyone is valued and appreciated for their distinct contributions to the growth and sustainability of our business. 5 Table of Contents Equal Opportunity Employment is a fundamental principle of AZZ, where employment and applications for employment are evaluated based upon a person’s capabilities and qualifications without discrimination based on actual or perceived race, color, religion, sex, age, national origin, disability, genetic information, marital status, veteran status, sexual orientation, or any other protected characteristic as established by applicable local, state, federal or international laws.
As of February 29, 2024, our U.S. employees had the following race and ethnicity demographics: White 44.0 % Hispanic 35.4 % African American 13.6 % Asian 1.2 % Multi-Racial 1.4 % American Indian or Alaska Native 0.8 % Not Stated 3.6 % Approximately 52.4% of our employees are diverse, as reported to the Equal Employment Opportunity Commission.
As of February 28, 2025, our U.S. employees had the following race and ethnicity demographics: White 42.6 % Hispanic 37.3 % African American 12.8 % Asian 1.4 % Multi-Racial 1.0 % American Indian or Alaska Native 0.5 % Not Stated 4.4 % Approximately 53.0% of our employees are diverse, as reported to the Equal Employment Opportunity Commission.
You may review the Corporate Governance Guidelines, Codes of Conduct or any of our sustainability or corporate social responsibility policies, and our Committee charters under the heading "Investor Relations," 8 Table of Contents subheadings "Corporate Governance," or "Corporate Social Compliance" on our website at: www.azz.com.
The Board has adopted charters for each of its Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. You may review the Corporate Governance Guidelines, Codes of Conduct or any of our sustainability or corporate social responsibility policies, and our Committee charters under the heading "Investor Relations," subheadings "Corporate Governance," or "Corporate Social Compliance" on our website at: www.azz.com.
Financial Statements and Supplementary Data—Note 18." AZZ Precoat Metals Segment AZZ Precoat Metals engages in the advanced application of protective and decorative coatings and related value-added manufacturing for steel and aluminum coil primarily serving the construction; appliance; heating, ventilation and air conditioning (HVAC); container; transportation and other end markets.
Financial Statements and Supplementary Data—Note 18." AZZ Precoat Metals Segment 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.
As of February 29, 2024, our employees had the following gender demographics: Women Men U.S. Employees 15.0% 85.0% Global Employees (1) 14.3% 85.7% (1) Includes employees in Canada. Additionally, 22.2% of the executive team and 22.2% of our non-employee Board members are female.
As of February 28, 2025, our employees had the following gender demographics: Women Men U.S. Employees 14.7% 85.3% Global Employees (1) 4.6% 95.4% (1) Includes employees in Canada. Additionally, 12.5% of the executive team and 16.7% of our non-employee Board members are female.
Although paint prices have risen in recent years, we carry limited risk associated with paint cost, as it is a pass-through to our customer base. There are currently no concerns regarding the availability of customer-owned bare substrate as an input to our coil coating process, despite recent volatility in substrate price and lead times.
Although paint prices have risen in recent years, we carry limited risk associated with paint cost, as it is a pass-through to our customer base. There are currently no concerns regarding the availability of customer-owned bare substrate as an input to our coil coating process. For additional information on the AZZ Precoat Metals segment's operating results, see "Item 7.
The zinc alloying provides corrosion protection and extends the lifecycle of fabricated steel for several decades. As of February 29, 2024, we operated 41 galvanizing plants, six surface technologies plants and one tubing plant, located in various locations throughout the United States and Canada.
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. As of February 28, 2025, we operated 41 galvanizing plants, six surface technologies plants and one tubing plant, located in various locations throughout the United States and Canada.
For additional information on the AZZ Precoat Metals segment's operating results, see "Item 7. Management's Discussion and Analysis—Results of Operations." For additional financial information by segment, see "Item 8.
Management's Discussion and Analysis—Results of Operations." For additional financial information by segment, see "Item 8.
AZZ Metal Coatings Segment The AZZ Metal Coatings segment 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 the United States and Canada. Hot-dip galvanizing is a metallurgical manufacturing process in which molten zinc reacts with steel.
AZZ Metal Coatings Segment The AZZ Metal Coatings segment 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.
Of our total employees as of February 29, 2024, 624 were covered by collective bargaining agreements. 5 Table of Contents Diversity and Inclusion We embrace the diversity of our employees, customers, vendors, suppliers, stakeholders and consumers, including their unique backgrounds, experiences, skills and talents.
Diversity and Inclusion We embrace the diversity of our employees, customers, vendors, suppliers, stakeholders and consumers, including their unique backgrounds, experiences, skills and talents.
Strategy AZZ is North America’s leading independent post-fabrication hot-dip galvanizing and coil coating solutions company with leading positions in markets we serve. Our business segments provide sustainable, unmatched metal coating solutions that reduce emissions, extend the lifecycle, and enhance the appearance of buildings products and infrastructure that are essential to everyday life.
Our business segments provide sustainable, unmatched metal coating solutions that reduce emissions, extend the lifecycle, and enhance the appearance of buildings products and infrastructure that are essential to everyday life.
Our Employees As of February 29, 2024, we employed approximately 3,873 people worldwide, of which 3,575 were employed in the U.S. and 298 were employed in Canada. Our total workforce consisted of approximately 84% hourly employees and 16% salaried employees.
Our Employees As of February 28, 2025, we employed approximately 3,684 people worldwide, of which 3,358 were employed in the U.S. and 326 were employed in Canada. Our total workforce consisted of approximately 83% hourly employees and 17% salaried employees. Of our total employees as of February 28, 2025, 668 were covered by collective bargaining agreements.
Our customers, and us as their toll processor, also face competition from alternative forms of coated metal, like powder-coated metal, or from other potential substrates such as wood, plastics, or concrete that could be used in place of painted metal.
Competition AZZ Precoat Metals operates in a highly competitive industry, where we compete with other toll coil coaters, and integrated steel and aluminum mills. We also face competition from alternative forms of coated metal, such as powder-coated metal, or from other potential substrates such as wood, plastics, or concrete that could be used in place of painted metal.
The acquisition expanded our geographical reach in metal coating solutions and broadened our offerings in strategic markets. For additional information on the AZZ Metal Coatings segment's operating results, see "Item 7. Management's Discussion and Analysis—Results of Operations." For additional financial information by segment, see "Item 8.
We may or may not continue to use these or other strategies to manage commodity risk in the future. For additional information on the AZZ Metal Coatings segment's operating results, see "Item 7. Management's Discussion and Analysis—Results of Operations." For additional financial information by segment, see "Item 8.
Financial Statements and Supplementary Data—Note 19." Human Capital Management At AZZ, our culture is defined by trust, respect, accountability, integrity, teamwork and sustainability ("TRAITS"). We value our employees by continuously investing in a healthy work-life balance, offering competitive compensation and benefit packages and a team-oriented environment centered on professional service and open communication among our employees.
We value our employees by continuously investing in a healthy work-life balance, offering competitive compensation and benefit packages and a team-oriented environment centered on professional service and open communication among our employees. We are dedicated to our employees by fully training and equipping them and providing a safe environment to grow personally and professionally.
For the years ended February 28, 2023 and February 28, 2022, financial data for the AZZ Infrastructure Solutions business is segregated and reported as discontinued operations. Unless stated otherwise, the discussion of our business and financial information throughout this Annual Report on Form 10-K refers to our continuing operations and results from continuing operations.
Unless stated otherwise, the discussion of our business and financial information throughout this Annual Report on Form 10-K refers to our continuing operations and results from continuing operations. Strategy AZZ is North America’s leading independent post-fabrication hot-dip galvanizing and coil coating solutions company with leading positions in markets we serve.
Ferguson 67 President and Chief Executive Officer 2013 Philip Schlom 59 Senior Vice President, Chief Financial Officer Vice President and Chief Accounting Officer/Interim Chief Financial Officer 2020 2019 Tara D.
Ferguson 68 President and Chief Executive Officer 2013 Jason Crawford 51 Chief Financial Officer Senior Vice President of Finance — Precoat Metals Senior Vice President of Finance — Sequa Corporation Senior Vice President of Finance and Administration — Precoat Metals 2024 2022-2024 2020-2022 2016-2020 Tara D.
Removed
AIS Investment Holdings LLC was wholly-owned by AZZ until September 30, 2022, when we contributed our AZZ Infrastructure Solutions business, excluding AZZ Crowley Tubing and excluding certain receivables retained by AZZ ("AIS"), to the AVAIL JV and sold a 60% interest in the AVAIL JV to Fernweh Group LLC ("Fernweh").
Added
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.
Removed
We may or may not continue to use these or other strategies to manage commodity risk in the future. Recent Acquisitions On February 28, 2022, we entered into an agreement to acquire all the outstanding shares of DAAM Galvanizing Co. Ltd. ("DAAM"), a privately held hot-dip galvanizing company based in Edmonton, Alberta Canada.
Added
The acquisition of Precoat Metals in fiscal year 2023 finalized our goal of strategic transformation to position AZZ for the future as a focused metal coatings solutions company. The AZZ Precoat Metals segment operates through 13 plants located in the United States, with the newest facility in Washington, Missouri which became operational in fiscal year 2026.
Removed
The acquisition added two galvanizing facilities and a service depot and supported our goal of continued geographic expansion as well as portfolio expansion of our metal coatings solutions. On December 31, 2021, we completed the acquisition of the assets of Steel Creek Galvanizing Company, LLC, a privately held hot-dip galvanizing company based in Blacksburg, South Carolina.
Added
Financial Statements and Supplementary Data—Note 19." On March 10, 2025, AIS Investment Holdings LLC, which operates under the name "AVAIL Infrastructure Solutions," entered into a definitive agreement to sell the electrical enclosures, switchgear, and bus systems businesses (the "Electrical Products Group") of AVAIL to nVent Electric plc ("nVent"), for a purchase price of $975 million, The transaction is expected to close in the first half of calendar year 2025, subject to customary closing conditions.
Removed
The acquisition of Precoat Metals in fiscal year 2023 supported our goal of continued geographic expansion as well as portfolio expansion of our metal coatings solutions.
Added
Following the sale, we will continue to own a 40% interest in AVAIL through the AVAIL JV, which will consist of AVAIL Infrastructure Solution’s Industrial Lighting and Welding Solutions Businesses. Human Capital Management At AZZ, our culture is defined by trust, respect, accountability, integrity, teamwork and sustainability ("TRAITS").
Removed
The AZZ 4 Table of Contents Precoat Metals segment operates through 13 plants located in the United States, and is constructing a new facility in Washington, Missouri that is expected to be operational by 2025. Competition AZZ Precoat Metals operates in a highly competitive industry, where we compete with other toll coil coaters, and integrated steel and aluminum mills.
Removed
We are dedicated to our employees by fully training and equipping them and providing a safe environment to grow personally and professionally.
Removed
Everyone is valued and appreciated for their distinct contributions to the growth and sustainability of our business.
Removed
The Board has adopted charters for each of its Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

67 edited+6 added−23 removed82 unchanged
Biggest changeAn unauthorized disclosure or use of information could cause interruptions in our operations and might require us to spend significant management time and other resources investigating the event and dealing with local and federal law enforcement. 11 Table of Contents Occurrences of any of the events discussed above could disrupt our business, result in potential liability or reputational damage or otherwise have an adverse effect on our business, results of operations or financial condition.
Biggest changeThird-party systems on which we rely could also suffer operational system failures or cyber-attacks. An unauthorized disclosure or use of information could cause interruptions in our operations and might require us to spend significant management time and other resources investigating the event and dealing with local and federal law enforcement.
Certain competitors in each of our segments may have lower cost structures or larger economies of scale on raw materials and may, therefore, be able to provide their manufactured solutions at lower prices than we are able to provide. If our response to competitor pricing actions is not timely, we could be impacted by loss of market share.
Certain competitors in each of our segments may have lower cost structures or larger economies of scale on raw materials and therefore, may be able to provide their manufactured solutions at lower prices than we are able to provide. If our response to competitor pricing actions is not timely, we could be impacted by loss of market share.
We seek to maintain our operating margins by increasing the price of our manufactured solutions in response to increased costs but may not be successful in passing these increased costs of operation through to our customers. Even if successful, there is no guarantee the increased price would not negatively affect the volume of future orders.
We seek to maintain our operating margins by increasing the price of our manufactured solutions in response to increased costs, but we may not be successful in passing these increased costs of operation through to our customers. Even if successful, there is no guarantee the increased price would not negatively affect the volume of future orders.
Any significant cyber security attacks that affect our facilities, our customers, our key suppliers, or material financial data could have a material adverse effect on our business. In addition, cyber-attacks on our customers, suppliers and employee data may result in a financial loss, including potential fines for failure to safeguard data, and may negatively impact our reputation.
Any significant cyber security attacks that affect our facilities, our customers, our key suppliers, or material financial data could have a material adverse effect on our business. In addition, cyber-attacks on our customers, suppliers and employee data may result in a financial loss, including potential fines for failure to safeguard data, and could negatively impact our reputation.
Future acquisitions may require us to obtain additional equity or debt financing, which may not be available to us, and may increase our leverage ratios. We may be unsuccessful at implementing and generating internal growth from our strategic growth initiatives.
Future acquisitions may require us to obtain additional equity or debt financing, which may not be available to us, and/or may increase our leverage ratios. We may be unsuccessful at implementing and generating internal growth from our strategic growth initiatives.
Our indebtedness and restrictive debt covenants could materially adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business, our ability to react to changes in the economy or our industry, our ability to meet our obligations under our outstanding indebtedness and could divert our cash flow from operations for debt payments.
Our indebtedness and restrictive debt covenants could materially adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business, our ability to react to changes in the economy or our industry, our ability to meet our obligations under our outstanding indebtedness or could divert our cash flow from operations for debt payments.
Our increased indebtedness and these restrictive covenants could adversely affect our ability to: • finance our operations; • make needed capital expenditures; • make strategic acquisitions or investments or enter into joint ventures; • withstand a future downturn in our business, the industry or the economy in general; • engage in business activities, including future opportunities, that may be in our best interest; and • plan for or react to market conditions or otherwise execute our business strategies.
Our increased indebtedness and these restrictive covenants could adversely affect our ability to: • finance our operations; • make needed capital expenditures; • make strategic acquisitions or investments or enter into joint ventures; • withstand a future downturn in our business, industry or the economy in general; • engage in business activities, including future opportunities, that may be in our best interest; and • plan for or react to market conditions or otherwise execute our business strategies.
As a result of these restrictions, we could be limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants.
As a result of these restrictions, we could be limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants.
On September 30, 2022, we completed a disposition of 60% of the equity of AIS Investment Holdings LLC, a Delaware limited liability company (the "AVAIL JV"), which consists of our former AZZ Infrastructure Solutions Segment (excluding AZZ Crowley Tubing) (the "AIS Business"), with Fernweh AIS Acquisition LP, a Delaware limited partnership.
Our On September 30, 2022, we completed a disposition of 60% of the equity of AIS Investment Holdings LLC, a Delaware limited liability company (the "AVAIL JV"), which consists of our former AZZ Infrastructure Solutions Segment (excluding AZZ Crowley Tubing) (the "AIS Business"), with Fernweh AIS Acquisition LP, a Delaware limited partnership.
In addition, U.S. federal, state, local and foreign tax laws and regulations are extremely complex and subject to varying interpretations. Moreover, economic and political pressures to increase tax revenue in various jurisdictions may make resolving any future tax disputes favorably more difficult.
In addition, U.S. federal, state, local and foreign tax laws and regulations are extremely complex and subject to varying interpretations. Moreover, economic and political pressures to increase tax revenue in various jurisdictions may make favorably resolving any future tax disputes more difficult.
If any of the following risks actually occur, our business, financial condition and results of operations and future growth could be negatively or materially impacted. Carefully consider the risks described below and all of the other information included in this Annual Report on Form 10-K when deciding whether to invest in our securities or otherwise evaluating our business.
If any of the following risks actually occur, our business, financial condition, results of operations and future growth could be negatively or materially impacted. Carefully consider the risks described below and all of the other information included in this Annual Report on Form 10-K when deciding whether to invest in our securities or when evaluating our business.
A decrease in the value of the Canadian currency relative to the U.S. dollar could have a negative impact on our business, financial condition, results of operations or cash flows. As we continue to expand geographically, we could experience economic loss and a negative impact on earnings or net assets solely as a result of foreign currency exchange rate fluctuations.
A decrease in the value of the Canadian currency relative to the U.S. dollar could have a negative impact on our business, financial condition, results of operations or cash flows. Should we continue to expand geographically, we could experience economic loss and a negative impact on earnings or net assets solely as a result of foreign currency exchange rate fluctuations.
A change in a customer’s creditworthiness could result in significant accounts receivable write-offs. As a normal course of business, we extend credit to certain of our customers. The amount of credit extended to customers is based upon the due diligence performed, including, but not limited to, the review of the potential customer’s financial statements and banking information.
A change in a customer’s creditworthiness could result in significant accounts receivable write-offs. As a normal course of business, we extend credit to certain customers. The amount of credit extended to customers is based upon the due diligence performed, including, but not limited to, the review of the potential customer’s financial statements and banking information.
For both segments, operating margins could be negatively impacted by supply chain disruptions and adverse price movements in the market for zinc, natural gas, and paint. Unanticipated commodity price increases could significantly increase our operating costs if we cannot pass the costs to our customers, and could potentially adversely affect profitability.
For both segments, operating margins could be negatively impacted by supply chain disruptions and adverse price movements in the market for zinc and natural gas. Unanticipated commodity price increases could significantly increase our operating costs if we cannot pass the costs to our customers, and could potentially adversely affect profitability.
Item 1A. Risk Factors Our business is subject to a variety of risks, including, but not limited to, the risks described below, which we believe are the most significant risks and uncertainties facing our business. Additional risks and uncertainties not known to us or not described below may also impair our business operations in the future.
Item 1A. Risk Factors Our business is subject to a variety of risks, including, but not limited to, the risks described below. We believe the risks described below are the most significant risks and uncertainties facing our business. Additional risks and uncertainties not known to us or not described below may also impair our business operations in the future.
Moreover, our acquisition strategy involves certain risks, including: • risks and liabilities from our acquisitions that may not be discovered during the pre-acquisition due diligence process; • difficulties in the post-acquisition integration of operations and systems; • the termination of relationships with key personnel and customers of the acquired company; • the potential failure to add additional employees to manage the increased volume of business; • additional post-acquisition challenges and complexities in areas such as tax planning, treasury management, financial reporting and legal compliance; • a disruption of our ongoing business or an inability of our ongoing business to receive sufficient management attention; • a failure to realize the cost savings or other financial benefits we anticipated prior to acquisition; • expansion through acquisition may expose us to new business, regulatory, political, operational, financial, and economic risks associated with such expansion, both inside and outside of the U.S.; and • counterparties to the transaction may fail to perform.
Moreover, our acquisition strategy involves certain risks, including: • risks and liabilities from our acquisitions that may not be discovered during the pre-acquisition due diligence process; • difficulties in the post-acquisition integration of internal controls, operations and systems; • termination of relationships with key personnel and customers of the acquired company; • potential failure to add additional employees to manage the increased volume of business; • additional post-acquisition challenges and complexities in areas such as tax planning, treasury management, financial reporting and legal compliance; • disruption of our ongoing business or an inability of our ongoing business to receive sufficient management attention; • failure to realize the cost savings or other financial benefits we anticipated prior to acquisition; • expansion through acquisition may expose us to new business, regulatory, political, operational, financial, and economic risks associated with such expansion, both inside and outside of the U.S.; and • counterparties to the transaction may fail to perform.
The market price of our stock may be influenced by many factors, some of which are beyond our control, including the following: • the inability to meet the financial estimates of analysts who follow our common stock; • investor perceptions of the investment opportunity associated with our Company relative to other investment alternatives; • strategic actions by us or our competitors; • announcements by us or our competitors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments; • variations in our quarterly operating results and those of our competitors; • general economic and stock market conditions; 19 Table of Contents • risks relating to our business and our industry, including those discussed above; • changes in conditions or trends in our industry, markets or customers; • cyber-attacks, terrorist acts or armed hostilities; • future sales of our common stock or other securities; • repurchases of our outstanding shares; and • material weaknesses in our internal control over financial reporting.
The market price of our stock may be influenced by many factors, some of which are beyond our control, including the following: • the inability to meet the financial estimates of analysts who follow our common stock; • investor perceptions of the investment opportunity associated with our Company relative to other investment alternatives; • strategic actions by us or our competitors; • Announcements by us or our competitors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments; • variations in our quarterly operating results and those of our competitors; • general economic and stock market conditions; • risks relating to our business and our industry, including those discussed above; • changes in conditions or trends in our industry, markets or customers; • cyber-attacks, terrorist acts or armed hostilities; • future sales of our common stock or other securities; • repurchases of our outstanding shares; and • material weaknesses in our internal control over financial reporting.
The financial impact of the heightened focus on sustainability practices for all companies to increase efficiencies in consumption of resources and regulations regarding greenhouse gas emissions will depend on a number of factors including, but not limited to: • the sectors covered; • future permitted levels for greenhouse gas emissions; 14 Table of Contents • the extent to which we would be entitled to receive emission allowance allocations or would need to invest in additional compliance equipment or compliance instruments, either on the open market or through auctions; • the price and availability of emission allowances and credits; and • the impact of legislation or other regulation on our ability to recover the costs incurred through the pricing of our manufactured solutions.
The financial impact of the heightened focus on sustainability practices for all companies to increase efficiencies in consumption of resources and regulations regarding greenhouse gas emissions will depend on a number of factors including, but not limited to: • the sectors covered; • future permitted levels for greenhouse gas emissions; • the extent to which we would be entitled to receive emission allowance allocations or would need to invest in additional compliance equipment or compliance instruments, either on the open market or through auctions; • the price and availability of emission allowances and credits; and • the impact of legislation or other regulation on our ability to recover the costs incurred through the pricing of our manufactured solutions.
We carry certain limits of insurance to mitigate the potential effects of events that could impact our businesses, as well as disaster recovery plans related to any potential severe weather events and other natural conditions that might occur within regions in which we have operations, or at any of the Company locations.
We carry certain limits of insurance to mitigate the potential effects of events that could impact our business, as well as disaster recovery plans related to any potential severe weather events and other natural conditions that might occur within regions in which we have operations, or at any of the Company locations.
Under applicable accounting literature, and when appropriate, we establish financial provisions for certain legal exposures meeting the criteria of being both probable and reasonably estimable. Where material, we may adjust any such financial provisions from time to time depending on developments related to each case.
Under applicable accounting literature, and when appropriate, we establish financial provisions for certain legal exposures meeting the criteria of being both probable and reasonably estimable. Where material, we may adjust any such financial provisions depending on developments related to each case.
Because techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative or mitigating measures.
Because techniques used to obtain unauthorized access or sabotage systems change frequently and are typically not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative or mitigating measures.
Widespread manufacturing defects and quality system failures could result in significant losses due to the costs of containment, the destruction of customer-owned inventory, consequential damages and lost sales due to the unavailability of a solution for a period of time.
Widespread manufacturing defects and quality system failures could result in significant losses due to the costs of containment, the destruction of customer-owned inventory and lost sales due to the unavailability of a solution for a period of time.
Our ability to generate internal growth will be affected by, among other factors, our ability to: • attract new customers, internationally and domestically; • integrate regulatory changes; • increase the number or size of projects performed for existing customers; • hire and retain employees: • complete construction projects in a timely manner; and 12 Table of Contents • increase volume utilizing existing facilities.
Our ability to generate internal growth will be affected by, among other factors, our ability to: • attract new customers, internationally and domestically; • integrate regulatory changes; • increase the number or size of projects performed for existing customers; • hire and retain employees: • complete construction projects in a timely manner; and • increase volume utilizing existing facilities.
Our failure to comply with the restrictive covenants described above and/or the terms of any future indebtedness from time to time could result in an event of default, which, if not cured or waived, could result in our being required to repay 15 Table of Contents these borrowings before their due date and the termination of future funding commitments by our lenders.
Our failure to comply with the restrictive covenants described above and/or the terms of any future indebtedness from time to time could result in an event of default which, if not cured or waived, could result in our being required to repay these borrowings before their due date and the termination of future funding commitments by our lenders.
These situations are outside of the Company’s control and any of these events could have a material adverse effect on our business, financial condition, results of operations, or cash flows. 10 Table of Contents Supply chain disruptions and inflation in the price of energy and certain raw materials for our business segments may adversely affect our operations.
These situations are outside of the Company’s control and any of these events could have a material adverse effect on our business, financial condition, results of operations, or cash flows. Supply chain disruptions and inflation in the price of energy and certain raw materials for our business segments may adversely affect our operations.
We monitor our outstanding receivables on a regular basis; however, if a customer with large 16 Table of Contents credit exposure is unable to make payment on its outstanding receivables, we could experience a significant write-off of accounts receivable, which could have a material adverse effect on our results of operations, financial condition or cash flows.
We monitor our outstanding receivables on a regular basis; however, if a customer with large credit exposure is unable to make payment on its outstanding receivables, we could experience a significant write-off of accounts receivable, which could have a material adverse effect on our results of operations, financial condition or cash flows.
There can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be 17 Table of Contents successful in any such challenge. Changes to our tax positions resulting from future tax legislation and administrative initiatives or challenges from taxing authorities could adversely affect our results of operations and financial condition.
There can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be successful in any such challenge. Changes to our tax positions resulting from future tax legislation, administrative initiatives or challenges from taxing authorities could adversely affect our results of operations and financial condition.
Failure of our copyrights, trademarks and trade secret protection, non-disclosure agreements and other measures to provide protection of our technologies and our intellectual property rights could enable our competitors to more effectively compete with us and could result in an adverse effect on our business, financial condition or results of operations.
Failure of our copyrights, trademarks and trade secret protection, non- 11 Table of Contents disclosure agreements and other measures to provide protection of our technologies and our intellectual property rights could enable our competitors to more effectively compete with us and could result in an adverse effect on our business, financial condition or results of operations.
Factors that could indicate that our goodwill or indefinite-lived intangible assets are impaired include a decline in our stock price and market capitalization, lower than projected operating results and cash flows and economic downturns or slower growth rates in our industry, market downturns or major events like a global pandemic.
Factors that could indicate that our goodwill or indefinite-lived intangible assets are impaired include: a decline in our stock price and market capitalization; lower than projected operating results and cash flows; economic downturns or slower growth rates in our industry; market downturns; or major events such as a global pandemic.
There are costs associated with complying with these disclosure requirements, including costs for due diligence 13 Table of Contents to determine the source of any conflict minerals used in our manufactured solutions and other potential changes to manufactured solutions, processes, or sources of supply.
There are costs associated with complying with these disclosure requirements, including costs for due diligence to determine the source of any conflict minerals used in our manufactured solutions and other potential changes to manufactured solutions, processes, or sources of supply.
Defects in the solutions we provide could increase our cost of quality and could result in consequential damage claims. Our business exposes us to potential liability risks that are inherent in the manufacture and sale of our solutions. We provide assurance-type warranties for our coil coating solutions.
Defects in the solutions we provide could increase our cost of quality and could result in consequential damage claims. Our business exposes us to potential liability risks that are inherent in the manufacture and sale of our solutions. We provide assurance-type warranties for our manufactured solutions.
Accordingly, our operating results in any particular quarter may not be indicative of the results expected for any other quarter or for the entire year. 9 Table of Contents Our business requires skilled labor, and we may be unable to attract and retain qualified employees.
Accordingly, our operating results in any particular quarter may not be indicative of the results expected for any other quarter or for the entire year. Our business requires skilled labor, and we may be unable to attract and retain qualified employees.
Our stock price historically has shown volatility and often fluctuates significantly in response to market and other factors. Declines in our stock price, lower operating results and any decline in industry conditions in the future could increase the risk of impairment.
Our stock price historically has shown volatility and 16 Table of Contents often fluctuates significantly in response to market and other factors. Declines in our stock price, lower operating results and any decline in industry conditions in the future could increase the risk of impairment.
Additionally, we may not be able to borrow money from other lenders to enable us to refinance our indebtedness. Increased levels of indebtedness could also create competitive disadvantages for us relative to other companies with lower debt levels.
Additionally, we may not be able to borrow money from other lenders to enable us to refinance our indebtedness. 15 Table of Contents Increased levels of indebtedness could also create competitive disadvantages for us relative to other companies with lower debt levels.
The following factors, which are beyond our control, affect the price of raw materials and energy for our segments: • supply and demand; • freight costs and transportation availability; • trade duties and taxes; and • labor disputes.
The following factors, which are beyond our control, affect the price of raw materials and energy for our segments: • supply and demand; 10 Table of Contents • freight costs and transportation availability; • trade duties and taxes; and • labor disputes.
We operate in locations throughout the U.S. and Canada and, as a result, we are subject to the tax laws and regulations of U.S. federal, state, and local governments and the Canadian g overnment. From time to time, various legislative or administrative initiatives may be proposed that could adversely affect our tax positions.
We operate in locations throughout the U.S. and Canada and, as a result, we are subject to the tax laws and regulations of U.S. federal, state, and local governments and the equivalent g overnmental entities in Canada. From time to time, various legislative or administrative initiatives may be proposed that could adversely affect our tax positions.
We cannot predict future changes in the law and government regulations regarding emissions, the environment and other sustainability matters, or what actions may be taken by our customers or other industry participants in response to any future legislation.
We cannot predict future changes in the law and government regulations regarding emissions, the environment and other 14 Table of Contents sustainability matters, or what actions may be taken by our customers or other industry participants in response to any future legislation.
Our quarterly results may be materially and adversely affected by the following, among others: • changes in political actions and landscapes across the globe, including global conflicts; • unstable political economic conditions and public health issues or crisis, such as a pandemic, delaying our or our customer's operations; • timing and volume of work under new or existing agreements; • general economic conditions; • fluctuations in the budgetary spending of customers, including seasonality; • increases in manufacturing or transportation costs; • variations in margins, due to sales price or manufacturing complexities, of projects performed during any particular quarter; • losses experienced in our operations not otherwise covered by insurance; • delays of raw materials or component suppliers; • a change in the demand of our manufactured solutions caused by severe weather conditions; • a change in the mix of our customers, contracts and business; • modifications or changes in customer delivery schedules; • ability or willingness of customers to timely pay their invoices when owed to us; and • changes in interest rates.
Our quarterly results may be materially and adversely affected by the following, among others: • Changes in political actions and landscapes across the globe, including global conflicts; • Unstable political economic conditions and public health issues or crisis, such as a pandemic, delaying our or our customer's operations; • Timing and volume of work under new or existing agreements; • General economic conditions; • Fluctuations in the budgetary spending of customers, including seasonality; • Increases in manufacturing or transportation costs; • Losses experienced in our operations not otherwise covered by insurance; • Delays of raw materials or component suppliers; • A change in the demand of our manufactured solutions caused by severe weather conditions; • A change in the mix of our customers, contracts and business; • Modifications or changes in customer delivery schedules; • Ability or willingness of customers to timely pay their invoices when owed to us; and • Changes in interest rates.
During fiscal 2024, we successfully refinanced our long-term debt to lower interest rates; however, if we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings in the future, our results of operations and financial condition could be adversely affected.
Historically, we have successfully refinanced our long-term debt to lower interest rates; however, if we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings in the future, our results of operations and financial condition could be adversely affected.
We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.
We cannot provide assurance that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.
While the Company is exposed to inflationary pressures for zinc, and energy, the Company evaluates market conditions and follows a general practice of locking in the fixed premiums associated with zinc on annual contracts unless market conditions dictate otherwise, and we enter into energy contracts for gas and electricity normally for durations of six- to twelve-months to reduce risks associated with large fluctuations in these commodities.
While we are exposed to inflationary pressures for zinc and energy, we evaluate market conditions and follow a general practice of locking in the fixed premiums associated with zinc on annual contracts unless market conditions dictate otherwise, and we enter into energy contracts for gas and electricity normally for durations of six to twelve months to reduce risks associated with large fluctuations in these commodities.
Our U.S.-based employees have the right at any time under the National Labor Relations Act to form or affiliate with a union.
Our U.S.-based employees have the right at any time under the National Labor Relations Act to form 13 Table of Contents or affiliate with a union.
As of February 29, 2024, the plan was underfunded, and we have a liability of $31.1 million on our consolidated balance sheet. Our ability to adequately fund or meet our future obligations with respect to the plan could have a material adverse effect on our business, results of operations, financial condition, or cash flows.
As of February 28, 2025, the plan was underfunded, and we have a liability of $24.6 million on our consolidated balance sheet. Our ability to adequately fund or meet our future obligations with respect to the plan could have a material adverse effect on our business, results of operations, financial condition, or cash flows.
Adoption of new or revised employment and labor laws and regulations could make it easier for our employees to obtain union representation and our business could be adversely impacted. As of February 29, 2024, 624 (or 16.1%) of our full-time employees were represented by unions under collective bargaining agreements.
Adoption of new or revised employment and labor laws and regulations could make it easier for our employees to obtain union representation and our business could be adversely impacted. As of February 28, 2025, 668 (or 18.1%) of our full-time employees were represented by unions under collective bargaining agreements.
Changes in U.S. or international social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where we currently manufacture, distribute and/or sell our manufactured solutions or conduct our business, as well as any negative sentiment toward the U.S. as a result of such changes, could adversely affect our business.
Our business could be adversely affected by: • changes in U.S. or international social, political, regulatory and economic conditions; • changes in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where we currently manufacture, distribute and/or sell our manufactured solutions or conduct our business, or any negative sentiment toward the U.S. as a result of such changes; • new tariffs or changes in existing tariffs; and • other changes in U.S. trade policy.
As of February 29, 2024, we have $1.0 billion of gross debt outstanding that bears interest at variable rates that reset periodically and are generally based on the Secured Overnight Financing Rate ("SOFR") or Base Rate, as defined in the Credit Agreement.
As of February 28, 2025, we have $900.3 million of gross debt outstanding that bears interest at variable rates that reset periodically and are generally based on the Secured Overnight Financing Rate ("SOFR") or Base Rate, as defined in the Credit Agreement.
It is necessary that we maintain a skilled labor force to operate efficiently and support our growth strategy. Labor shortages or increased labor-related costs could impair our ability to maintain our profit margins or impact our ability to sustain and grow our sales. Technological innovations by competitors may make existing production methods obsolete.
It is necessary that we maintain a skilled labor force to operate efficiently and support our growth strategy. Labor shortages or increased labor-related costs could impair our ability to maintain our profit margins or impact our ability to sustain and grow our sales.
It is possible for our competitors, or new market place entrants, both foreign and domestic, to develop new manufactured solution methods or technologies which could make our existing manufactured solutions or methods obsolete or at least hasten their obsolescence or materially reduce our competitive advantage in the markets that we serve.
It is possible for our competitors, or new market place entrants, either foreign or domestic, to develop new manufactured solution methods or technologies which could make our existing manufactured solutions and methods obsolete, hasten their obsolescence or materially reduce our competitive advantage in the markets we serve. Our business segments are cyclical and are sensitive to economic downturns.
New tariffs, changes in existing tariffs and other changes in U.S. trade policy have the potential to adversely impact the economies in which we operate or certain sectors thereof, our industry and the demand for our manufactured solutions, and as a result, could have a material adverse effect on our business, operating results and financial condition.
All of the above listed changes have the potential to adversely impact the economies in which we operate or certain sectors thereof, our industry and the demand for our manufactured solutions, and as a result, could have a material adverse effect on our business, operating results and financial condition.
Our business segments are cyclical and are sensitive to economic downturns. Our business often aligns with the economic environments that we operate within, especially in our Precoat Metals segment, and is subject to seasonality within the annual operating cycle of the business. Our customers may delay or cancel new or previously planned projects.
Our business often aligns with the economic environments that we operate within and is subject to seasonality within the annual operating cycle of the business. Our customers may also delay or cancel new or previously planned projects.
The Company may perform various credit checks and evaluate the customer's previous payment history. While we do not believe we have significant concentration of sales with any one customer, we have certain larger customers, which could result in a significant amount of credit exposure if there is a sudden or severe change in the customer’s creditworthiness.
While we do not believe we have significant concentration of sales with any one customer, we have certain larger customers and the extension of credit to these customers could result in a significant amount of credit exposure if there is a sudden or severe change in the customer’s creditworthiness.
Our business is also subject to risks associated with U.S. and foreign legislation and regulations relating to imports, including quotas, duties, tariffs or taxes, and other charges or restrictions on imports, which could adversely affect our operations and our ability to import or export manufactured solutions at current or increased levels, and substantially all of our import operations are subject to customs duties on imported manufactured solutions imposed by the governments where our production facilities are located, including raw materials.
Our business is also subject to risks associated with U.S. and foreign legislation and regulations relating to imports, including quotas, duties, tariffs or taxes, and other charges or restrictions on imports, which could adversely affect our operations and our ability to import or export manufactured solutions at current or increased levels.
Failure to comply with these negative covenants and affirmative covenants could result in an event of default that, if not cured or waived, could restrict the Company’s access to liquidity and have a material adverse effect on the Company’s business or prospects.
The Company’s debt instruments also contain covenants requiring the Company to, among other things, maintain specified financial ratios ("affirmative covenants"). Failure to comply with these negative covenants and affirmative covenants could result in an event of default that, if not cured or waived, could restrict the Company’s liquidity and have a material adverse effect on the Company’s business or prospects.
We cannot exercise sole decision-making authority regarding the AIS Business, including, but not limited to, hiring and retaining employees and executive officers, management of and payments into its multiemployer pension plans, governance issues, entering into new markets or exiting existing markets, making certain acquisitions or dispositions, and other material strategic transactions, which in each case could create the potential risk of creating operational issues and/or impasses on decisions or decisions at the AVAIL JV-level not in our best interest.
We cannot exercise sole decision-making authority regarding the AIS Business, including, but not limited to, hiring and retaining employees and executive officers, management of and payments into its multiemployer pension plans, governance issues, entering into new markets or exiting existing markets, making certain acquisitions or dispositions, and other material strategic transactions.
We utilize interest rate swaps to mitigate the interest rate risk, and we have hedged approximately one-half of our gross debt outstanding. However, approximately one-half of our gross debt outstanding is unhedged.
We utilize interest rate swaps to mitigate the interest rate risk, and we have hedged approximately one-half of our gross debt outstanding with an interest rate swap that expires on September 30, 2025. Approximately one-half of our gross debt outstanding is unhedged.
If we are unable to adequately protect our intellectual property, we may lose some of our competitive advantage. We possess intellectual property, which is instrumental in our ability to compete and grow our business. If our intellectual property rights are not adequately protected, we could lose our competitive advantage.
We possess intellectual property, which is instrumental in our ability to compete and grow our business. If our intellectual property rights are not adequately protected, we could lose our competitive advantage. We rely on a combination of copyrights, trademarks, trade secret protection and contractual rights to establish and protect our intellectual property.
The manufactured solutions we provide require evolving technologies for success in the markets we serve. The competitive environments can be highly sensitive to technological innovation.
Technological innovations by competitors may make existing production methods obsolete. 9 Table of Contents The manufactured solutions we provide require evolving technologies for success in the markets we serve. The competitive environments can be highly sensitive to technological innovation.
These covenants may limit our ability to optimally operate our business. In addition, our Credit Agreement requires that we meet certain financial tests, including a leverage ratio test.
Our level of indebtedness could adversely affect us, including by decreasing our business flexibility. Our Credit Agreement contains a number of restrictive covenants that impose significant operating and financial restrictions on us. These covenants may limit our ability to optimally operate our business. In addition, our Credit Agreement requires that we meet certain financial tests, including a leverage ratio test.
Risks Related to Financial Matters and Our Capital Structure The Company’s flexibility to operate its business could be impacted by provisions in its debt obligations.
Risks Related to Financial Matters and Our Capital Structure The Company’s flexibility to operate its business could be impacted by provisions in its debt obligations. The Company’s debt instruments, consisting of a term loan and a revolving credit facility, contain covenants which restrict or prohibit certain actions ("negative covenants").
We may not be able to obtain indemnity or reimbursement from our suppliers or other third parties for the costs or liabilities associated with our suppliers' products.
We may not be able to obtain indemnity or reimbursement from our suppliers or other third parties for the costs or liabilities associated with our suppliers' products. A significant warranty claim could also result in adverse publicity, damage to our business reputation, and a loss of consumer confidence in our solutions or offerings.
The Company’s debt instruments, consisting of a term loan and a revolving credit facility, contain covenants which restrict or prohibit certain actions ("negative covenants"), including, but not limited to, the Company's ability to incur debt, restrict or limit certain liens, capital spending limits, engage in certain merger, acquisition, or divestiture actions, or increase dividends beyond a specific level.
These restrictions include, but are not limited to, the Company's ability to incur debt, restrictions or limitations on certain liens, capital spending limits, the ability to engage in certain merger, acquisition, or divestiture actions, or to increase dividends beyond a specific level.
A significant warranty claim could also result in adverse publicity, damage to our business reputation, and a loss of consumer confidence in our solutions or offerings all of which could have a material adverse effect on our business financial condition or results of operations. Risks Related to Strategy Our acquisition strategy involves a number of risks.
Each of these could have a material adverse effect on our business financial condition or results of operations. Risks Related to Strategy Our acquisition strategy involves a number of risks.
We may incur losses beyond the limits, or outside the coverage, of our insurance policies, including liabilities for environmental remediation. In the future, the types of insurance we obtain and the level of coverage we maintain may be inadequate or we may be unable to continue to maintain our existing insurance or obtain comparable insurance at a reasonable cost.
We may incur losses beyond the limits, or outside the coverage, of our insurance policies, including liabilities for environmental remediation.
Most actions filed against our Company typically arise out of the normal course of business related to commercial disputes regarding equipment we manufacture or services we provide.
The Company could be named as a defendant in legal proceedings claiming damages from us in connection with the operation of our business. Most actions filed against our Company typically arise out of the normal course of business related to commercial disputes regarding the manufactured solutions we provide.
Interest Rate Risk An increase in interest rates would increase interest costs on variable-rate debt and could adversely impact the ability to refinance existing debt.
In the future, the types of insurance we obtain and the level of coverage we maintain may be inadequate or we may be unable to continue to maintain our existing insurance or obtain comparable insurance at a reasonable cost. 17 Table of Contents Interest Rate Risk An increase in interest rates would increase interest costs on variable-rate debt and could adversely impact the ability to refinance existing debt.
We cannot be certain that any individual will continue in such capacity for any particular period of time. The future loss of key personnel, or the inability to hire and retain qualified employees, could negatively impact our ability to manage our business, which could disrupt our operations or otherwise have a material adverse effect on our business.
The future loss of key personnel, or the inability to hire and retain qualified employees, could negatively impact our ability to manage our business, which could disrupt our operations or otherwise have a material adverse effect on our business. 12 Table of Contents Risks Related to Legal Liability, Taxes, and Regulations Actual and potential claims, lawsuits, and proceedings could ultimately reduce our profitability and liquidity and negatively impact our financial condition.
We are exposed to exchange rate fluctuations in the international markets in which we operate. We operate in the United States and Canada and anticipate that there will be instances in which sales and costs will not be exactly matched with respect to foreign currency denomination.
We are exposed to exchange rate fluctuations in the international markets in which we operate. We are exposed to risks associated with exchange rate fluctuations related to our operations in Canada.
Removed
Third-party systems on which we rely could also suffer operational system failures or cyber-attacks.
Added
Occurrences of any of the events discussed above could disrupt our business, result in potential liability or reputational damage or otherwise have an adverse effect on our business, results of operations or financial condition. If we are unable to adequately protect our intellectual property, we may lose some of our competitive advantage.
Removed
We rely on a combination of copyrights, trademarks and trade secret protection and contractual rights to establish and protect our intellectual property.
Added
In addition, our competitors may develop proprietary information or manufacturing technologies that are equivalent or superior to our intellectual property. Despite our safeguards and controls, our intellectual property may be misappropriated by our employees, our competitors, or other third parties.
Removed
In addition, our trade secrets and proprietary know-how may otherwise become known or be independently discovered by others. No guarantee can be given that others will not independently develop substantially equivalent or superior proprietary information or manufacturing and service know-how and techniques, or otherwise gain access to our proprietary technology.
Added
We cannot be certain that any individual will continue in such capacity for any particular period of time.
Removed
Risks Related to Legal Liability, Taxes, and Regulations Actual and potential claims, lawsuits, and proceedings could ultimately reduce our profitability and liquidity and negatively impact our financial condition. The Company could be named as a defendant in legal proceedings claiming damages from us in connection with the operation of our business.
Added
Each of these cases could create the potential risk of creating operational issues and/or impasses on decisions at the AVAIL JV-level that are not in our best interest.
Removed
The Company’s debt instruments also contain covenants requiring the Company to, among other things, maintain specified financial ratios ("affirmative covenants").
Added
The Company may perform various credit checks and evaluate the customer's previous payment history.
Removed
Our consolidated indebtedness increased substantially following the completion of the acquisition of Precoat Metals ("Precoat Acquisition") in May 2022. This increased level of indebtedness could adversely affect us, including by decreasing our business flexibility. Our Credit Agreement contains a number of restrictive covenants that impose significant operating and financial restrictions on us.
Added
Because our financial statements are denominated in U.S dollars, fluctuations in currency exchange rates between the U.S. dollar and the Canadian dollar have had and will continue to have an impact on our earnings.
Removed
Gains and losses from the remeasurement of assets and liabilities that are receivable or payable in currencies other than our subsidiaries’ functional currency are included in our consolidated statements of income. In addition, currency fluctuations cause the U.S. dollar value of our Canadian results of operations and net assets to vary with exchange rate fluctuations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Audit Committee of the Board of Directors is tasked with reviewing our policies and procedures related to cybersecurity risks, 20 Table of Contents including the Company's cybersecurity risk management program discussed above, to ensure their alignment with industry best practices and regulatory standards.
Biggest changeRisk Factors." Our approach to cybersecurity governance is embedded within the broader governance structure of the Company. The Audit Committee of the Board of Directors is tasked with reviewing our policies and procedures related to cybersecurity risks, including the Company's cybersecurity risk management program discussed above, to ensure their alignment with industry best practices and regulatory standards.
Item 1C. Cybersecurity We recognize the critical importance of cybersecurity in today's digital landscape and acknowledge the inherent risks associated with cyber threats. As such, cybersecurity is an integral component of our overall risk management strategy and corporate governance framework.
Item 1C. Cybersecurity 18 Table of Contents We recognize the critical importance of cybersecurity in today's digital landscape and acknowledge the inherent risks associated with cyber threats. As such, cybersecurity is an integral component of our overall risk management strategy and corporate governance framework.
These training courses are provided annually to all employees. • Annual Risk Assessment - An annual risk assessment is conducted by a third party, which is designed to assess the effectiveness of the Company's security controls and to identify key risks. • Network Protection - Network protection, detection, and monitoring technologies have been deployed on all external and internal network connections to segment different sections of the business from each other to strengthen key protection capabilities. • Identity and Access Management - We have implemented user authentication controls on the Company's systems, devices, data and applications.
These training courses are required to be completed annually by all employees. • Annual Risk Assessment— An annual risk assessment is conducted by a third party, which is designed to assess the effectiveness of the Company's security controls and to identify key risks. • Network Protection— Network protection, detection, and monitoring technologies have been deployed on all external and internal network connections, in order to segment different sections of the business from each other, which strengthens key protection capabilities. • Identity and Access Management— We have implemented user authentication controls on the Company's systems, devices, data and applications.
The committee regularly provides updates to senior leadership and the Audit Committee, as well as the full Board, which includes information regarding our cybersecurity program initiatives, program performance, and the reporting provided by third party service providers.
The committee regularly provides updates to senior leadership and the Audit Committee, as well as the full Board, which includes 19 Table of Contents information regarding our cybersecurity program initiatives, program performance, and the reporting provided by third-party service providers.
The Audit Committee and the Board of Directors ("Board") regularly engages with management to assess cybersecurity risks, mitigation efforts, and the overall effectiveness of our cybersecurity program. Our Director of Information Technology Infrastructure leads a dedicated management committee responsible for overseeing cybersecurity matters.
The Audit Committee and the Board of Directors ("Board") regularly engages with management to assess cybersecurity risks, mitigation efforts, and the overall effectiveness of our cybersecurity program. Our Director of Enterprise Applications leads a dedicated management committee responsible for overseeing cybersecurity matters.
Removed
Risk Factors." Our approach to cybersecurity governance is embedded within the broader governance structure of the Company.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of February 29, 2024, our office and manufacturing operations facilities were as follows: Square Footage Segment Location Number of Facilities Total Owned Leased Metal Coatings United States 44 3,121,628 2,801,118 320,510 Canada 4 193,952 186,645 7,307 Precoat Metals United States 13 3,407,682 2,686,472 721,210 Corporate United States 2 68,939 — 68,939 Total 63 6,792,201 5,674,235 1,117,966 We believe that our current facilities are adequate to meet the requirements of our present and foreseeable future operations.
Biggest changeAs of February 28, 2025, our office and manufacturing operations facilities were as follows: Square Footage Segment Location Facilities Total Owned Leased Metal Coatings United States 44 3,121,628 2,801,118 320,510 Canada 4 193,952 186,645 7,307 Precoat Metals United States 13 3,413,066 2,802,396 610,670 Corporate United States 2 68,939 — 68,939 Total 63 6,797,585 5,790,159 1,007,426 We believe that our current facilities are adequate to meet the requirements of our present and foreseeable future operations.
See "Item 8. Financial Statements and Supplementary Data—Note 10" for additional information about our lease obligations. See "Item 7. Management's Discussion and Analysis—Greenfield Aluminum Coil Coating Facility" for information about a new facility under construction in our AZZ Precoat Metals segment.
See "Item 8. Financial Statements and Supplementary Data—Note 10" for additional information about our lease obligations. See "Item 7. Management's Discussion and Analysis—Capital Commitments—Greenfield Aluminum Coil Coating Facility" for information about a new facility under construction in our AZZ Precoat Metals segment.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFinancial Statements and Supplementary Data—Note 22" for further discussion. Item 4. Mine Safety Disclosures Not applicable. 21 Table of Contents PART II
Biggest changeFinancial Statements and Supplementary Data—Note 22" for further discussion. Item 4. Mine Safety Disclosures Not applicable. 20 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 21 PART II 22 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 22 Item 6. [Reserved] 23 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 38 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 20 PART II 21 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 6. [Reserved] 22 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 36 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe withhold common stock shares associated with net share settlements to cover employee tax withholding obligations upon the vesting of restricted stock unit awards under our employee equity incentive program. As of February 29, 2024, there was $53.2 million remaining to repurchase shares under the 2020 Authorization.
Biggest changeDuring fiscal 2025, 2024 and 2023, to prioritize repayments of debt, we did not repurchase shares of common stock under the 2020 Share Authorization. We withhold common stock shares associated with net share settlements to cover employee tax withholding obligations upon the vesting of restricted stock unit awards under our employee equity incentive program.
The index level for all series was set to $100 on February 28, 2019.
The index level for all series was set to $100 on February 28, 2020.
As of April 18, 2024, we had approximately 325 holders of record of our common stock, not including those shares held in street or nominee name. A substantially greater number of holders of our common stock are "street name" or beneficial holders whose shares are held of record by banks, brokers and other financial institutions.
As of April 15, 2025, we had approximately 319 holders of record of our common stock, not including those shares held in street or nominee name. A substantially greater number of holders of our common stock are "street name" or beneficial holders whose shares are held of record by banks, brokers and other financial institutions.
We paid dividends on common shares of $17.0 million, $16.9 million, and $16.9 million for the fiscal years 2024, 2023, and 2022, respectively.
We paid dividends on common shares of $19.5 million, $17.0 million, and $16.9 million for the fiscal years 2025, 2024, and 2023, respectively.
Equity Compensation Plans For information regarding securities authorized for issuance under our equity compensation plans, see Part III, Item 12, "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters." Purchases of Equity Securities On November 10, 2020, our Board of Directors authorized a $100 million share repurchase program pursuant to which we may repurchase our common stock (the "2020 Authorization").
Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters." Purchases of Equity Securities On November 10, 2020, our Board of Directors authorized a $100 million share repurchase program pursuant to which we may repurchase our common stock (the "2020 Authorization").
Companies) and the Russell 2000 Index (U.S. Companies). The Company's common stock is listed on the New York Stock Exchange. The shareholder return shown below is not necessarily indicative of future performance. Total shareholder return, as shown, assumes $100 invested on February 28, 2019, in shares of AZZ common stock and each index, all with cash dividends reinvested.
Our common stock is listed on the New York Stock Exchange. The shareholder return shown below is not necessarily indicative of future performance. Total shareholder return, as shown, assumes $100 invested on February 28, 2020, in shares of AZZ common stock and each index, all with cash dividends reinvested. The calculations exclude trading commissions and taxes.
See Note 17 to the consolidated financial statements included in Item 8 of this Form 10-K for additional information regarding our equity incentive plans. 22 Table of Contents Stock Performance Graph The following graph illustrates the five-year cumulative total return on investments in our common stock, the S&P 1500 Building Products Industry Index (U.S.
Financial Statements and Supplementary Data—Note 17" for additional information regarding our equity incentive plans. 21 Table of Contents Stock Performance Graph The following graph illustrates the five-year cumulative total return on investments in our common stock, the S&P 1500 Building Products Industry Index (U.S. Companies) and the Russell 2000 Index (U.S. Companies).
We can make dividend payments under other provisions of the credit agreement as well, subject to the tests and restrictions outlined therein. Any future dividends payments will be reviewed each quarter and declared by the Board at its discretion. The 6.0% Series A Convertible Preferred Stock ("Series A Preferred Stock") accumulates a 6.0% dividend per annum.
We can make dividend payments under other provisions of the credit agreement as well, subject to the tests and restrictions outlined therein. Any future dividends payments will be reviewed each quarter and declared by the Board at its discretion. Equity Compensation Plans For information regarding securities authorized for issuance under our equity compensation plans, see "Part III.
Comparison of Five Year-Cumulative Total Returns Value of $100 Invested on February 28, 2019 For Fiscal Year Ended on the Last Day of February February 28/29, 2019 2020 2021 2022 2023 2024 AZZ Inc. 100.00 90.00 103.00 103.00 92.00 136.00 S&P Composite 1500 Building Industry Products 100.00 116.00 150.00 186.00 179.00 224.00 Russell 2000 100.00 102.00 132.00 129.00 123.00 124.00 Notes: A.
Comparison of Five Year-Cumulative Total Returns Value of $100 Invested on February 28, 2020 For Fiscal Year Ended on the Last Day of February Year Ended 2/29/2020 2/28/2021 2/28/2022 2/28/2023 2/29/2024 2/28/2025 AZZ Inc. 100.00 141.23 137.90 115.80 210.45 280.22 S&P Composite 1500 Building Industry Products 100.00 145.69 163.90 164.43 230.24 247.28 Russell 2000 100.00 151.00 141.92 133.39 146.79 156.61 Notes: A.
Removed
Dividends are payable in cash or in kind, by accreting and increasing the Series A Base Amount ("PIK Dividends"). Dividends are payable on the sum of (i) the Series A Base Amount plus (ii) any PIK Dividends. Dividends are accrued daily and paid quarterly in arrears, on March 31, June 30, September 30 and December 31 of each year.
Added
As of February 28, 2025, there was $53.2 million remaining to repurchase shares under the 2020 Authorization. See "Item 8.
Removed
We paid dividends on preferred shares of $14.4 million and $5.8 million, for fiscal years 2024 and 2023, respectively. Following the calendar quarter ending June 30, 2027, we may not elect PIK Dividends and dividends on the Series A Preferred Stock must be paid in cash.
Removed
The dividend will increase annually by one percentage point, beginning with the dividend payable for the calendar quarter ending September 30, 2028. We currently intend to pay such dividends in cash when due.
Removed
During fiscal 2024 and 2023, to prioritize repayments of debt, including debt incurred to finance the Precoat Acquisition, we did not repurchase shares of common stock under the 2020 Share Authorization.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAdjusted EBITDA from Continuing Operations Year Ended February 29/28, 2024 2023 Net income from continuing operations $ 101,607 $ 66,339 Interest expense 107,065 88,800 Income tax expense 28,496 22,336 Depreciation and amortization (6) 79,423 74,590 Adjustments: Acquisition and transaction-related expenditures (3) — 15,320 Legal settlement and accrual (4) 17,043 — Adjusted EBITDA from continuing operations (non-GAAP) $ 333,634 $ 267,385 See notes on page 37 . 36 Table of Contents Adjusted EBITDA by Segment Year Ended February 29, 2024 Metal Coatings Precoat Metals Infra- structure Solutions Corporate Total Net income (loss) from continuing operations $ 164,856 $ 139,571 $ 9,161 $ (211,981) $ 101,607 Interest expense — — — 107,065 107,065 Income tax expense — — — 28,496 28,496 Depreciation and amortization (6) 26,353 27,941 — 25,129 79,423 Adjustments: Legal settlement and accrual (4) 5,450 — 5,750 5,843 17,043 Adjusted EBITDA from continuing operations (non-GAAP) $ 196,659 $ 167,512 $ 14,911 $ (45,448) $ 333,634 See notes on page 37 .
Biggest changeYear Ended February 29, 2024 Metal Coatings Precoat Metals Infra- structure Solutions Corporate Total Net income (loss) from continuing operations $ 164,856 $ 139,571 $ 9,161 $ (211,981) $ 101,607 Interest expense — — — 107,065 107,065 Income tax expense — — — 28,496 28,496 Depreciation and amortization 26,353 27,941 — 25,129 79,423 Adjustments: Legal settlement and accrual (3) 5,450 — 5,750 5,843 17,043 Adjusted EBITDA from continuing operations (non-GAAP) $ 196,659 $ 167,512 $ 14,911 $ (45,448) $ 333,634 See notes on page 35 . 34 Table of Contents Debt Leverage Ratio Reconciliation Trailing Twelve Months Ended February 28, February 29, 2025 2024 Gross debt $ 900,250 $ 1,010,250 Less: Cash per bank statement (12,670) (24,807) Add: Finance lease liability 6,647 3,987 Consolidated indebtedness $ 894,227 $ 989,430 Net income $ 128,833 $ 101,607 Depreciation and amortization 82,205 79,423 Interest expense 81,282 107,065 Income tax expense 41,850 28,496 EBITDA 334,170 316,591 Cash items (7) 15,325 25,443 Non-cash items (8) 12,161 9,510 Equity in earnings, net of distributions (3,598) (12,294) Adjusted EBITDA per Credit Agreement $ 358,058 $ 339,250 Net leverage ratio 2.5x 2.9x (1) Earnings per share amounts included in the "Adjusted Net Income and Adjusted Earnings Per Share from Continuing Operations" table above may not sum due to rounding differences.
Management believes that the presentation of these measures provides investors with greater transparency when comparing operating results across a broad spectrum of companies, which provides a more complete understanding of our financial performance, competitive position and prospects for future capital investment and debt reduction.
Management believes that the presentation of these measures provides investors with greater transparency when comparing operating results across a broad spectrum of companies, which provides a more complete understanding of our financial performance, competitive position, prospects for future capital investment and debt reduction.
The amounts we may record for estimated claims, such as self-insurance programs, warranty, environmental, legal, and other contingent liabilities, requires us to make judgments regarding the amount of expenses that will ultimately be incurred. We use past history and experience and other specific circumstances surrounding these claims in evaluating the amount of liability that should be recorded.
The amounts we may record for estimated claims, such as self-insurance programs, warranty, environmental, legal, and other contingent liabilities, requires us to make judgments regarding the amount of expenses that will ultimately be incurred. We use past history and experience as well as other specific circumstances surrounding these claims in evaluating the amount of liability that should be recorded.
GAAP requires us to make judgments, assumptions, and estimates that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Actual results may differ from these estimates under different assumptions or conditions. The SEC defines critical accounting estimates as those made in accordance with U.S.
GAAP requires us to make judgments, assumptions, and estimates that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results may differ from these estimates under different assumptions or conditions. The SEC defines critical accounting estimates as those made in accordance with U.S.
As defined in the 2022 Credit Agreement, quarterly prepayments are due against the outstanding principal of the Term Loan B and are payable on the last business day of each May, August, November and February, beginning August 31, 2022, in a quarterly aggregate principal amount of $3.25 million, with the entire remaining principal amount due on May 13, 2029, the maturity date.
As defined in the 2022 Credit Agreement, quarterly prepayments were due against the outstanding principal of the Term Loan B and were payable on the last business day of each May, August, November and February, beginning August 31, 2022, in a quarterly aggregate principal amount of $3.25 million, with the entire remaining principal amount due on May 13, 2029, the maturity date.
A discussion regarding our financial condition and results of operations as well as our liquidity and capital resources for fiscal year 2023 compared to fiscal year 2022 can be found under " Item 7 .
A discussion regarding our financial condition and results of operations as well as our liquidity and capital resources for fiscal year 2024 compared to fiscal year 2023 can be found under "Item 7.
Impairment of Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination and is not amortized.
Impairment of Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination and is not amortized.
Management also believes that investors regularly rely on non-GAAP financial measures, such as adjusted net income, adjusted earnings per share and adjusted EBITDA to assess operating performance and that such measures may highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP.
Management also believes that investors regularly rely on non-GAAP financial measures, such as adjusted net income, adjusted earnings per share and Adjusted EBITDA to assess operating performance and that such 31 Table of Contents measures may highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP.
Other Exposures We have exposure to commodity price increases in all three of our operating segments, primarily zinc and natural gas in the AZZ Metal Coatings segment, and natural gas, steel and aluminum in the AZZ Precoat Metals segment.
Other Exposures We have exposure to commodity price increases in all three of our operating segments, primarily zinc and natural gas in the AZZ Metal Coatings segment, and natural gas, as well as steel and aluminum scrap, in the AZZ Precoat Metals segment.
Results of Operations Net income (loss) from continuing operations by segment for fiscal 2024 and 2023 were as follows (in thousands): Year Ended February 29, 2024 Metal Coatings (1) Precoat Metals Infrastructure Solutions (2) Corporate (3)(4) Total Sales $ 656,189 $ 881,400 $ — $ — $ 1,537,589 Cost of sales 465,147 708,981 — — 1,174,128 Gross margin 191,042 172,419 — — 363,461 Selling, general and administrative 26,314 32,848 6,246 76,453 141,861 Operating income (loss) from continuing operations 164,728 139,571 (6,246) (76,453) 221,600 Interest expense — — — (107,065) (107,065) Equity in earnings of unconsolidated subsidiaries — — 15,407 — 15,407 Other income 128 — — 33 161 Income (loss) from continuing operations before income tax $ 164,856 $ 139,571 $ 9,161 (183,485) 130,103 Income tax expense 28,496 28,496 Net income (loss) from continuing operations $ (211,981) $ 101,607 (1) For fiscal 2024, AZZ Metal Costings included expenses related to a legal matter of $5.5 million in "Selling, general and administrative".
Year Ended February 29, 2024 Metal Coatings (1) Precoat Metals Infrastructure Solutions (2) Corporate (3)(4) Total Sales $ 656,189 $ 881,400 $ — $ — $ 1,537,589 Cost of sales (5) 465,147 708,981 — — 1,174,128 Gross margin 191,042 172,419 — — 363,461 Selling, general and administrative (6) 26,314 32,848 6,246 76,453 141,861 Operating income (loss) from continuing operations 164,728 139,571 (6,246) (76,453) 221,600 Interest expense — — — (107,065) (107,065) Equity in earnings of unconsolidated subsidiaries — — 15,407 — 15,407 Other income 128 — — 33 161 Income (loss) from continuing operations before income tax $ 164,856 $ 139,571 $ 9,161 (183,485) 130,103 Income tax expense 28,496 28,496 Net income (loss) from continuing operations $ (211,981) $ 101,607 24 Table of Contents (1) For fiscal year 2024, AZZ Metal Costings included expenses related to a legal matter of $5.5 million in "Selling, general and administrative".
Management believes Adjusted EBITDA is used by investors to analyze operating performance and evaluate the Company's ability to incur and service debt and its capacity for making capital expenditures in the future. 34 Table of Contents Management provides non-GAAP financial measures for informational purposes and to enhance understanding of the Company’s GAAP consolidated financial statements.
Management believes Adjusted EBITDA is used by investors to analyze operating performance and evaluate the Company's ability to incur and service debt, as well as its capacity for making capital expenditures in the future. Management provides non-GAAP financial measures for informational purposes and to enhance understanding of the Company’s GAAP consolidated financial statements.
If we perform a quantitative assessment for our annual goodwill impairment test, we use the income approach.
If we perform a quantitative assessment for the annual goodwill impairment test, then we use the income approach.
(4) For the year ended February 29, 2024, represents a legal accrual related to the Metal Coatings segment of $5.5 million, $5.8 million for the settlement of a litigation matter related to the AIS segment that was retained following the sale of the AIS business, and $5.8 million for the settlement of a litigation matter that was acquired as part of the Precoat Acquisition and relates to the business activities that were discontinued prior to our acquisition.
For the year ended February 29, 2024, consists of the $5.5 million accrual for the Metal Coatings segment, $5.75 million for the settlement of a litigation matter related to the AIS segment that was retained following the sale of the AIS business, and $5.8 million for the settlement of a litigation matter that was acquired as part of the Precoat Acquisition and relates to the business activities that were discontinued prior to the acquisition.
Due to the significant subjectivity of the assumptions used to test for recoverability, changes in market conditions could result in significant impairment charges in the future, which would impact our earnings. 33 Table of Contents Accruals for Contingent Liabilities We are subject to the possibility of various loss contingencies arising in the normal course of business.
Due to the significant subjectivity of the assumptions used to test for recoverability, changes in market conditions could result in significant impairment charges in the future, which would impact our net income. Accruals for Contingent Liabilities We are subject to the possibility of various loss contingencies arising in the normal course of business.
The 2022 Credit Agreement includes the following significant terms: i. provides for a senior secured initial term loan in the aggregate principal amount of $1.3 billion (the "Term Loan B"), due May 13, 2029, which is secured by substantially all of the assets of the Company; ii. provides for a maximum senior secured Revolving Credit Facility in the aggregate principal amount of $400.0 million (the "Revolving Credit Facility"), due May 13, 2027; iii. includes a letter of credit sub-facility of up to $100.0 million, which is part of, and not in addition to, the Revolving Credit Facility; 29 Table of Contents iv. borrowings under the Term Loan B bear a rate of Secured Overnight Financing Rate ("SOFR") plus 3.75% (following the repricing on August 17, 2023 as described below) and the Revolving Credit Facility bears a leverage-based rate between 2.75% and 3.50%; as of February 29, 2024, the rate was SOFR plus 3.50% (following the repricing on December 20, 2023, as described below); v. includes customary affirmative and negative covenants, and events of default; including restrictions on the incurrence of non-ordinary course debt, investment and dividends, subject to various exceptions; and, vi. includes a maximum quarterly leverage ratio financial covenant, with reporting requirements to our banking group at each quarter-end.
The 2022 Credit Agreement includes the following significant terms: i. provides for a senior secured initial term loan in the aggregate principal amount of $1.3 billion (the "Term Loan B"), due May 13, 2029, which is secured by substantially all of the assets of the Company; as of February 28, 2025, the outstanding balance of the Term Loan B was $870.3 million; 27 Table of Contents ii. provides for a maximum senior secured Revolving Credit Facility in the aggregate principal amount of $400.0 million (the "Revolving Credit Facility"), due May 13, 2027; iii. includes a letter of credit sub-facility of up to $100.0 million, which is part of, and not in addition to, the Revolving Credit Facility; iv. borrowings under the Term Loan B bear an interest rate of Secured Overnight Financing Rate ("SOFR") plus 2.50% (following the repricings on March 20, 2024 and September 24, 2024 as described below) and the Revolving Credit Facility bears a leverage-based rate with various tiers between 1.75% and 2.75%; following the repricing on February 27, 2025, as described below, the interest rate as of February 28, 2025, was SOFR plus 2.25%; v. includes customary affirmative and negative covenants, and events of default; including restrictions on the incurrence of non-ordinary course debt, investment and dividends, subject to various exceptions; and, vi. includes a maximum quarterly leverage ratio financial covenant, with reporting requirements to our banking group at each quarter-end.
(3) Interest expense and Income tax expense are included in the Corporate segment as these items are not allocated to the segments. (4) For fiscal year 2024, amortization expense for acquired intangible assets of $24.0 million is included in Corporate expenses in "Selling, general and administrative" expense as these expenses are not allocated to the segments.
(3) Interest expense and Income tax expense are included in the Corporate segment as these items are not allocated to the segments. (4) For fiscal year 2025, amortization expense for acquired intangible assets of $23.1 million is included in Corporate expenses in "Selling, general and administrative" expense as these expenses are not allocated to the segments.
These letters of credit are issued for a number of reasons, but are most commonly issued to support collateral requirements with insurance companies. As of February 29, 2024, we have contractual commitments related to the construction of the coil coating facility in Washington, Missouri of $43.2 million that are expected to be paid in the next 12 months.
These letters of credit are issued for a number of reasons, but are most commonly issued to support collateral requirements with insurance companies. As of February 28, 2025, we have contractual commitments related to the construction of the coil coating facility in Washington, Missouri of $7.5 million that are expected to be paid in the next 12 months.
Manage ment's Discussion and Analysis" in our Annual Report on Form 10-K for the fiscal year ended February 28, 2023, filed with the SEC on April 25, 2023, which such discussion is hereby incorporated by reference. Overview We are a provider of hot-dip galvanizing and coil coating solutions to a broad range of end-markets in North America.
Management's Discussion and Analysis" in our Annual Report on Form 10-K for the fiscal year ended February 29, 2024, filed with the SEC on April 22, 2024, which such discussion is hereby incorporated by reference. Overview We are a provider of hot-dip galvanizing and coil coating solutions to a broad range of end-markets in North America.
Variables impacting future cash flows include, but are not limited to, the level of customer demand for and response to manufactured solutions we offer to the construction, industrial, consumer, transportation, electrical, and utility markets, changes in economic conditions of these various markets, changes in costs of raw material and natural gas, and the availability of experienced labor and management to implement our growth strategies.
Variables impacting future cash flows include, but are not limited to, the level of customer demand for and response to manufactured solutions we offer to the construction, industrial, consumer, transportation, electrical, and utility markets, changes in economic conditions of these various markets, assumptions about future sales, zinc and natural gas prices, operating costs, margins and the availability of experienced labor and management to implement our growth strategies.
Net cash provided by operating activities was used to fund $95.1 million of capital expenditures, make net payments on long term debt and finance leases liabilities of $115.4 million and make dividend payments of $31.4 million.
Net cash provided by operating activities was used to fund $95.1 million of capital expenditures, make net payments on long term debt and finance leases liabilities of $115.4 million and make dividend payments of $31.4 million. See "Financing and Capital" section below for additional information.
For the fiscal year ended February 29, 2024, we recorded sales of $1,537.6 million, compared to prior year’s sales of $1,323.6 million. Of total sales for fiscal 2024, 42.7% were generated from the AZZ Metal Coatings segment and 57.3% of sales were generated from the AZZ Precoat Metals segment.
For the fiscal year ended February 28, 2025, we recorded sales of $1,577.7 million, compared to prior year’s sales of $1,537.6 million. Of total sales for fiscal 2025, 42.2% were generated from the AZZ Metal Coatings segment and 57.8% of sales were generated from the AZZ Precoat Metals segment.
Management defines adjusted net income and adjusted earnings per share to exclude intangible asset amortization, acquisition expenses, transaction related expenses and certain legal settlements and accruals, from the reported GAAP measure. Management defines Adjusted EBITDA as earnings excluding depreciation, amortization, interest, provision for income taxes, acquisition expenses, transaction related expenses and certain legal settlements and accruals.
Management defines adjusted net income and adjusted earnings per share to exclude intangible asset amortization, certain legal settlements and accruals, and certain expenses related to non-recurring events from the reported GAAP measure. Management defines Adjusted EBITDA as adjusted net income excluding depreciation, amortization, interest, provision for income taxes and Series A Preferred Stock dividends.
(2) 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, including $5.8 million related to a legal settlement.
(2) 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. Fiscal year 2025 and 2024 include $6.5 million and $5.8 million, respectively, related to legal matters.
The calculation of adjusted diluted earnings per share is based on weighted average shares outstanding of 29,326 and 28,283, respectively, as the preferred shares are dilutive for these calculations. Adjusted net income for adjusted earnings per share also includes the addback of preferred dividends for the periods noted above.
The calculation of adjusted diluted earnings per share is based on weighted average shares outstanding of 30,134 and 29,326, respectively, as the Series A Preferred Stock is dilutive to adjusted diluted earnings per share. Adjusted net income for adjusted earnings per share also includes the addback of Series A Preferred Stock dividends for the periods noted above.
Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired also requires management to utilize assumptions and estimates, which are based upon available information that may be subject to further refinement over the purchase accounting period of one year. Recent Accounting Pronouncements See Part II, "Item 8.
The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired also requires management to utilize assumptions and estimates, which are based upon available information that may be subject to further refinement over the purchase accounting period of one year.
During fiscal 2024 and 2023, to prioritize repayments of debt, including debt incurred to finance the Precoat Acquisition, we did not repurchase shares of common stock under the 2020 Share Authorization. As of February 29, 2024, there was $53.2 million remaining to repurchase shares under the 2020 Authorization.
During fiscal 2025, to prioritize repayments of debt, we did not repurchase shares of common stock under the 2020 Share Authorization. As of February 28, 2025, there was $53.2 million remaining to repurchase shares under the 2020 Authorization.
Dividends are accrued daily and paid quarterly in arrears, on March 31, June 30, September 30 and December 31 of each year. Following the calendar quarter ending June 30, 2027, we may not elect PIK Dividends and dividends on the Series A Preferred Stock must be paid in cash. All dividends have been paid in cash through February 29, 2024.
Dividends were accrued daily and paid quarterly in arrears, on March 31, June 30, September 30 and December 31 of each year. Following the calendar quarter ending June 30, 2027, we were not able to elect PIK Dividends and dividends on the Series A Preferred Stock were required to be paid in cash.
Dividends are payable in cash or in kind, by accreting and increasing the Series A Base Amount (“PIK Dividends”). Dividends are payable on the sum of (i) the aggregate liquidation preference amount of $240.0 million plus (ii) any PIK Dividends.
Dividends The Series A Preferred Stock accumulated a 6.0% dividend per annum, or $15.00 per share per quarter. Dividends were payable in cash or in kind, by accreting and increasing the Series A Base Amount (“PIK Dividends”). Dividends were payable on the sum of (i) the aggregate liquidation preference amount of $240.0 million plus (ii) any PIK Dividends.
All such contracts expire in fiscal 2025. The Company had no other contracted commitments for any other commodities including steel, aluminum, copper, zinc, nickel based alloys, except for those entered into under the normal course of business. As of February 29, 2024, w e had outstanding letters of credit in the amount of $14.5 million.
We had no other contracted commitments for any other commodities including steel, aluminum, copper, zinc, nickel-based alloys, natural gas, except for those entered into under the normal course of business. As of February 28, 2025, w e had outstanding letters of credit in the amount of $15.4 million.
Our operating results for fiscal 2024, including operating results by segment, are described in the summary on the following page, and detailed descriptions can be found below under “Results of Operations.” Our operations generated $244.5 million of cash in fiscal 2024, which includes $54.0 million generated from reduction in working capital.
Our operating results for fiscal 2025, including operating results by segment, are described in the summary on the following page, and detailed descriptions can be found below under “Results of Operations.” Our operations generated $249.9 million of cash in fiscal 2025.
For example, the twelve-month period ended February 29, 2024 is referred to as "fiscal 2024," "fiscal year 2024", "current year" or "current period", and the twelve-month period ended February 28, 2023 is referred to as "fiscal 2023," "fiscal year 2023," "prior year" or "prior period." Business Operations Update Our results for the year ended February 29, 2024 were favorably impacted by the continued demand for our manufactured solutions in the construction, industrial, consumer and transportation industries, coupled with our value driven pricing strategy.
For example, the twelve-month period ended February 28, 2025 is referred to as "fiscal 2025," "fiscal year 2025", "current year" or "current period", and the twelve-month period ended February 29, 2024 is referred to as "fiscal 2024," "fiscal year 2024," "prior year" or "prior year period." Business Operations Update Our results for the year ended February 28, 2025 were favorably impacted by the growth in demand for our manufactured solutions, primarily in the construction industry.
Net income from continuing operations for fiscal 2024 was $101.6 million, compared to $66.3 million for fiscal 2023. Net income from continuing operations as a percentage of sales was 6.6% for fiscal 2024 as compared to 5.0% for fiscal 2023.
Net income from continuing operations for fiscal 2025 was $128.8 million, compared to $101.6 million for fiscal 2024. Net income from continuing operations as a percentage of sales was 8.2% for fiscal 2025 as compared to 6.6% for fiscal 2024.
We test goodwill for potential impairment annually as of December 31 and between annual tests if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of the reporting unit below its carrying amount. An entity may first assess qualitative factors to determine if a quantitative impairment test is necessary.
We test goodwill for potential impairment annually as of December 31, or more frequently, if an event occurs or circumstances change that would more-likely-than-not reduce the reporting unit's fair value below its carrying amount. 30 Table of Contents If no impairment indicators are present, we may first perform a qualitative assessment of goodwill to determine whether a quantitative assessment is necessary.
The repricing reduced the interest rate margin by 50 basis points to an interest rate of SOFR plus 3.75% and removed the Credit Spread Adjustment, as defined in the 2022 Credit Agreement, of 10 basis points. ii. On Decem ber 20, 2023, we repriced its $400.0 million Revolving Credit Facility.
The repricing reduced the margin from SOFR plus 4.25% to SOFR 3.75% and removed the Credit Spread Adjustment, as defined in the 2022 Credit Agreement, of 10 basis points. ii. On December 20, 2023, we repriced the Revolving Credit Facility.
(2) For the year ended February 29, 2024 and February 28, 2023, the calculation of diluted earnings per share is based on weighted average shares outstanding of 25,209 and 24,978, respectively, as the preferred shares are anti-dilutive for these calculations.
(2) For the year ended February 28, 2025 and February 29, 2024, diluted earnings per share is based on weighted average shares outstanding of 29,344 and 25,209, respectively, as the Series A Preferred Stock that was redeemed May 9, 2024 is anti-dilutive for these calculations.
Consolidated Financial Statements and Supplementary Data, Note 1," Summary of Significant Account Policies, of the Notes to the consolidated financial statements of this Annual Report on Form 10-K, for a full description of recent accounting pronouncements, including the actual and expected dates of adoption and estimated effects on our consolidated results of operations and financial condition, which is incorporated herein by reference.
Recent Accounting Pronouncements See "Part II. Item 8. Financial Statements and Supplementary Data—Note 1" for a full description of recent accounting pronouncements, including the actual and expected dates of adoption and estimated effects on our consolidated results of operations and financial condition, which is incorporated herein by reference.
The increase in sales was primarily due to an increase in selling price, which contributed $13.3 million and a higher volume of steel processed, which contributed $9.5 million. This increase was partially offset by a net decrease of $3.6 million in sales of other products.
The increase in sales was primarily due to a higher volume of steel processed which contributed $17.8 million, partially offset by a decrease in selling price, which decreased sales by $4.6 million. In addition, other sales decreased by $4.3 million.
Letters of Credit As of February 29, 2024, we had total outstanding letters of credit in the amount of $14.5 million. These letters of credit are issued for a number of reasons but are most commonly issued in lieu of customer retention withholding payments covering warranty, performance periods and insurance collateral.
These letters of credit are issued for a number of reasons, but are most commonly issued in lieu of customer retention withholding payments covering warranty, performance periods and insurance collateral.
The following tables provides a reconciliation for the years ended February 29, 2024 and February 28, 2023 between the non-GAAP Adjusted Earnings Measures to the most comparable measures calculated in accordance with GAAP (dollars in thousands, except per share data): 35 Table of Contents Adjusted Net Income and Adjusted Earnings Per Share from Continuing Operations Year Ended February 29/28, 2024 2023 Amount Per Diluted Share (1) Amount Per Diluted Share (1) Net income from continuing operations $ 101,607 $ 66,339 Less: preferred stock dividends (14,400) (8,240) Net income from continuing operations available to common shareholders 87,207 58,099 Impact of preferred stock dividends 14,400 8,240 Net income and diluted earnings per share from continuing operations for Adjusted net income calculation (2) 101,607 $ 3.46 66,339 $ 2.35 Adjustments: Acquisition and transaction-related expenditures (3) — — 15,320 0.54 Amortization of intangible assets 23,960 0.83 22,613 0.79 Legal settlement and accrual (4) 17,043 0.58 — — Subtotal 41,003 1.41 37,933 1.33 Tax impact (5) (9,841) (0.34) (9,104) (0.32) Total adjustments 31,162 1.07 28,829 1.01 Adjusted net income and adjusted earnings per share from continuing operations (non-GAAP) $ 132,769 $ 4.53 $ 95,168 $ 3.36 Weighted average shares outstanding - Diluted 29,326 28,283 See notes on page 37 .
The following tables provide a reconciliation for the years ended February 28, 2025 and February 29, 2024 between the non-GAAP Adjusted Earnings Measures to the most comparable measures, calculated in accordance with GAAP (dollars in thousands, except per share data): 32 Table of Contents Adjusted Net Income and Adjusted Earnings Per Share from Continuing Operations Year Ended February 28, 2025 February 29, 2024 Amount Per Diluted Share (1) Amount Per Diluted Share (1) Net income from continuing operations $ 128,833 $ 101,607 Less: Series A Preferred Stock Dividends (1,200) (14,400) Less: Redemption premium on Series A Preferred Stock (75,198) — Net income from continuing operations available to common shareholders (2) 52,435 87,207 Impact of Series A Preferred Stock dividends (2) 1,200 14,400 Net income and diluted earnings per share from continuing operations for Adjusted net income calculation (2) 53,635 $ 1.79 101,607 $ 3.46 Adjustments: Amortization of intangible assets 23,111 0.77 23,960 0.83 Legal settlement and accrual (3) 9,949 0.33 17,043 0.58 Retirement and other severance expense (4) 3,741 0.12 — — Redemption premium on Series A Preferred Stock (5) 75,198 2.50 — — Subtotal 111,999 3.72 41,003 1.41 Tax impact (6) (8,832) (0.29) (9,841) (0.34) Total adjustments 103,167 3.42 31,162 1.07 Adjusted net income and adjusted earnings per share from continuing operations (non-GAAP) $ 156,802 $ 5.20 $ 132,769 $ 4.53 Weighted average shares outstanding - Diluted for Adjusted earnings per share (2) 30,134 29,326 See notes on page 35 .
The 2022 Swap had an initial notional amount of $550.0 million and a maturity date of September 30, 2025. The notional amount of the interest rate swap decreases by a pro-rata portion of any quarterly principal payments made on the Term Loan B.
The notional amount of the interest rate swap decreases by a pro-rata portion of any quarterly principal payments made on the Term Loan B, and the notional amount is $536.3 million as of February 28, 2025.
Specifically, there were no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on the financial condition, changes in financial condition, sales or expenses, results of operations, liquidity, capital expenditures or capital resources of the Company. 32 Table of Contents As of February 29, 2024, the Company had non-cancelable forward contracts to purchase approximately $47.4 million of zinc at fixed premiums, and $8.2 million of natural gas.
Specifically, there were no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on the financial condition, changes in financial condition, sales or expenses, results of operations, liquidity, capital expenditures or capital resources of the Company.
Financing and Capital 2022 Credit Agreement and Term Loan B We have a credit agreement with a syndicate of financial institutions as lenders that was entered into on May 13, 2022 (the "2022 Credit Agreement").
Financing and Capital 2022 Credit Agreement and Term Loan B We have a credit agreement with a syndicate of financial institutions as lenders that was entered into on May 13, 2022 and was subsequently amended on August 17, 2023, December 20, 2023, March 20, 2024, September 24, 2024 and February 27, 2025 (collectively referred to herein as the "2022 Credit Agreement").
Share Repurchase Program On November 10, 2020, our Board of Directors authorized a $100 million share repurchase program pursuant to which we may repurchase our common stock (the "2020 Authorization").
The remaining payments through fiscal 2026 are expected to be funded through cash flows from operations. 29 Table of Contents Share Repurchase Program On November 10, 2020, our Board of Directors authorized a $100 million share repurchase program pursuant to which we may repurchase our common stock (the "2020 Authorization").
Interest Rate Swap We manage our exposure to fluctuations in interest rates by utilizing interest rate swaps to convert the variable interest rate to a fixed rate on approximately one-half of our variable-rate debt. 31 Table of Contents On September 27, 2022, we entered into a fixed-rate interest rate swap agreement with banks that are parties to the 2022 Credit Agreement, which was subsequently amended on October 7, 2022, to change the SOFR-based component of the interest rate.
On September 27, 2022, we entered into a fixed-rate interest rate swap agreement, which was subsequently amended on October 7, 2022 (the "2022 Swap"), with banks that are parties to the 2022 Credit Agreement, to change the SOFR-based component of the interest rate. The 2022 Swap converts the SOFR portion to 4.277%.
Cash Flows The following table summarizes our cash flows by category for the periods presented (in thousands): Year Ended February 29/28, 2024 2023 Net cash provided by operating activities of continuing operations $ 244,468 $ 91,430 Net cash used in investing activities of continuing operations (95,064) (1,228,921) Net cash provided by (used in) financing activities of continuing operations (147,888) 1,027,335 Net cash used in operating activities from discontinued operations — (21,275) Net cash used in investing activities from discontinued operations — (1,336) Net cash provided by financing activities from discontinued operations — 120,000 Net cash provided by operating activities of continuing operations for fiscal 2024 was $244.5 million, driven primarily by net income from continuing operations of $101.6 million, adjusted to exclude non-cash charges, net of non-cash income of $90.4 million, an increase in cash resulting from a reduction in working capital of $54.0 million, and a cash distribution on the investment in the AVAIL JV of $3.1 million.
Cash Flows The following table summarizes our cash flows by category for the periods presented (in thousands): Year Ended February 28, 2025 February 29, 2024 Net cash provided by operating activities of continuing operations $ 249,909 $ 244,468 Net cash used in investing activities of continuing operations (114,997) (95,064) Net cash used in financing activities of continuing operations (138,695) (147,888) Net cash provided by operating activities of continuing operations for fiscal 2025 was $249.9 million, driven primarily by: net income from continuing operations of $128.8 million, adjusted to exclude non-cash charges, net of non-cash income of $96.5 million; a decrease in cash from changes in other long-term assets and long-term liabilities of $13.1 million; an increase in cash from deferred tax of $8.0 million; an increase in cash resulting from a decrease in working capital of $17.1 million; and cash distributions on the investment in the AVAIL JV of $12.6 million.
See "Item 8. Financial Statements and Supplementary Data—Note 22." (5) The non-GAAP effective tax rate for each of the periods presented is estimated at 24.0%. (6) For fiscal year 2024, amortization expense for acquired intangible assets of $24.0 million is included in Corporate expenses in "Selling, general and administrative" expense as these expenses are not allocated to the segments.
For fiscal year 2024, amortization expense for acquired intangible assets of $24.0 million is included in Corporate expenses in "Selling, general and administrative" expense as these expenses are not allocated to the segments.
The new facility will be included in the AZZ Precoat Metals segment and is supported by a contractual commitment for approximately 75% of the output from the new plant. We expect to spend approximately $125.8 million for the land building and equipment.
The new greenfield facility will be included in the AZZ Precoat Metals segment and is supported by a take-or-pay contract for approximately 75% of the output from the new plant.
Net cash provided by operating activities of continuing operations for fiscal 2023 was $91.4 million, driven primarily by net income from continuing operations of $66.3 million, adjusted to exclude non-cash charges, net of non-cash income, of $97.7 million, and a decrease in cash resulting from an increase in working capital of $67.1 million and a decrease in cash from changes in other long-term assets and liabilities of $5.5 million.
Net cash provided by operating activities of continuing operations for fiscal 2024 was $244.5 million, driven primarily by net income from continuing operations of $101.6 million, adjusted to exclude non-cash charges, net of non-cash income, of $85.7 million , an increase in cash resulting from a reduction in working capital of $54.0 million, and a cash distribution on the investment in the AVAIL JV of $3.1 million.
Operating income for the AZZ Precoat Metals segment, which was acquired on May 13, 2022, increased $60.1 million, or 75.6%, for fiscal 2024, to $139.6 million, as compared to $79.5 million for the prior year.
Operating income for the AZZ Precoat Metals segment increased $8.3 million, or 5.9%, for fiscal 2025, to $147.8 million, as compared to $139.6 million for the prior year.
Other We plan to contribute $8.0 million to our pension plan during fiscal 2025. See "Item 8. Financial Statements and Supplementary Data—Note 16" for a discussion of our employee benefit plan.
Other We plan to contribute $6.0 million to our pension plan during fiscal 2026. See "Item 8. Financial Statements and Supplementary Data—Note 16" for a discussion of our employee benefit plans. As of February 28, 2025, we had $900.3 million of debt outstanding on the Revolving Credit Facility and the Term Loan B, with varying maturities through fiscal 2029.
The components of our liquidity and descriptions of our cash flows, capital investments, and other matters impacting our liquidity and capital resources can be found below under “Liquidity and Capital Resources.” Outlook While it is difficult to predict future North American economic activity and its impact on the demand for our galvanizing and coil coating solutions, as well the impact that political or regulatory developments may have on us, we have noted several factors below that have impacted or may impact our results of operations during the first quarter of fiscal 2025. • Sales prices in our AZZ Metal Coatings segment are expected to remain consistent with current levels. • Sales prices in our AZZ Precoat Metals segment are expected to remain consistent with current levels, with expected seasonal fluctuations in mix due to an increase in construction business, which may impact the average selling price. 24 Table of Contents • Demand in our AZZ Metal Coatings and AZZ Precoat Metals segments is expected to follow our typical seasonal patterns. • Customer inventories for our AZZ Metal Coatings segment remain constant, which should support the continued demand for our metal coatings solutions. • Customer inventories for our AZZ Precoat Metals segment remain at historical levels, which should support the continued demand for our coil coating solutions.
The components of our liquidity and descriptions of our cash flows, capital investments, and other matters impacting our liquidity and capital resources can be found below under “Liquidity and Capital Resources.” Outlook While it is difficult to predict future North American economic activity and its impact on the demand for our galvanizing and coil coating solutions, as well the impact that political or regulatory developments may have on us, we have noted several factors below that have impacted or may impact our results of operations during the first quarter of fiscal 2026. • Sales prices in our AZZ Metal Coatings segment are expected to remain consistent with current levels. • Sales prices in our AZZ Precoat Metals segment are expected to remain consistent with current levels, with expected seasonal fluctuations in mix due to an increase in construction business, which may impact the average selling price. • Demand in our AZZ Metal Coatings and AZZ Precoat Metals segments is expected to follow our typical seasonal patterns. • Customer inventories for our AZZ Metal Coatings segment remain consistent, which should support the continued demand for our metal coatings solutions. • Customer inventories for our AZZ Precoat Metals segment remain at historical levels, which should support the continued demand for our coil coating solutions. 23 Table of Contents Results of Operations Net income (loss) from continuing operations by segment for fiscal 2025 and 2024 were as follows (in thousands): Year Ended February 28, 2025 Metal Coatings (1) Precoat Metals Infrastructure Solutions (2) Corporate (3)(4) Total Sales $ 665,107 $ 912,637 $ — $ — $ 1,577,744 Cost of sales (5) 464,260 730,804 — — 1,195,064 Gross margin 200,847 181,833 — — 382,680 Selling, general and administrative (6) 22,372 34,005 6,737 83,202 146,316 Operating income (loss) from continuing operations 178,475 147,828 (6,737) (83,202) 236,364 Interest expense — — — (81,282) (81,282) Equity in earnings of unconsolidated subsidiaries — — 16,163 — 16,163 Other income (expense) 247 — — (809) (562) Income (loss) from continuing operations before income tax $ 178,722 $ 147,828 $ 9,426 (165,293) 170,683 Income tax expense 41,850 41,850 Net income (loss) from continuing operations $ (207,143) $ 128,833 See notes on page 25 .
These increases to operating income were partially offset by an increase in cost of sales, primarily driven by higher cost of labor and materials (primarily due to higher volume), higher employee related costs, travel, other indirect costs and the change in classification of certain compensation costs to the AZZ Precoat Metals segment, from the Corporate segment.
The increase is primarily due to the increase in sales as described above, partially offset by an increase in cost of sales, primarily driven by higher cost of labor and materials (mainly due to higher volume). Selling, general and administrative expense increased due to higher employee related costs, travel, other indirect costs.
We attempt to minimize these increases by entering into agreements with our zinc suppliers and such agreements generally include fixed premiums, and through fixed cost contract purchases on natural gas. In addition to these measures, we attempt to recover other cost increases through improvements to our manufacturing process, supply chain management, and through increases in prices where competitively feasible.
We attempt to minimize these increases by entering into agreements with our zinc suppliers and such agreements generally include fixed premiums, and by entering into agreements with our natural gas suppliers to fix a portion of our purchase cost.
The remaining increase was primarily due to an increase in sales price due to product mix. Operating Income Operating income for the AZZ Metal Coatings segment increased $8.7 million, or 5.6%, for fiscal 2024, to $164.7 million, as compared to $156.0 million for the prior year.
Operating Income Operating income for the AZZ Metal Coatings segment increased $13.7 million, or 8.3%, for fiscal 2025, to $178.5 million, as compared to $164.7 million for the prior year. The increase is due to net increase in sales as described above, lower cost of sales and lower selling, general and administrative expenses.
We utilize proceeds from the Revolving Credit Facility primarily to finance working capital needs, capital improvements, dividends, acquisitions and for general corporate purposes.
The repricing reduced the margin from 4.25% to a leverage-based rate with various tiers ranging from SOFR plus 2.75% to 3.50%. We primarily utilize proceeds from the Revolving Credit Facility to finance working capital needs, capital improvements, quarterly cash dividends, acquisitions and other general corporate purposes.
Business Combinations Assets acquired and liabilities assumed as part of a business acquisition are generally recorded at their fair value at the date of acquisition. The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill.
Due to the inherent limitations in estimating future events, actual amounts paid or transferred may differ from those estimates. Business Combinations Assets acquired and liabilities assumed as part of a business acquisition are generally recorded at their fair value at the date of acquisition.
See "Liquidity and Capital Resources—Greenfield Aluminum Coil Coating Facility" below for more information. Equity in Earnings of Unconsolidated Entities Equity in earnings of unconsolidated subsidiaries for the current period increased $12.8 million, to $15.4 million, compared to $2.6 million in the prior year period.
The decrease is also due to higher capitalized interest of $4.4 million in the current year period associated with the new facility under construction in Washington, Missouri. See "Liquidity and Capital Resources—Greenfield Aluminum Coil Coating Facility" below for more information.
The increase is primarily due to higher earnings from the AVAIL JV, and a full year of equity in earnings in the current period, compared to one month in the prior year period. See "Item 8. Financial Statements and Supplementary Data—Note 19" for more information about the AVAIL JV.
Equity in Earnings of Unconsolidated Entities Equity in earnings of unconsolidated subsidiaries for the current period increased $0.8 million, to $16.2 million, compared to $15.4 million in the prior year period. The increase is due to higher earnings from the AVAIL JV, primarily in their electrical business. See "Item 8.
Greenfield Aluminum Coil Coating Facility We are expanding our coatings capabilities through the construction of a 215,000 square foot aluminum coil coating facility in Washington, Missouri that is expected to be operational in fourth quarter of fiscal 2025.
We had approximately $354.6 million of additional credit available as of February 28, 2025. Capital Commitments—Greenfield Aluminum Coil Coating Facility We are expanding our coatings capabilities by constructing a new 25-acre aluminum coil coating facility in Washington, Missouri that is expected to be operational in calendar year 2025 (the Company's fiscal year 2026).
On March 20, 20 24, the Company repriced the Term Loan B, for which $980.3 million was outstanding as of February 29, 2024 under the 2022 Credit Agreement. The repricing converted from a rate of SOFR plus 3.75% to SOFR plus 3.25%.
During fiscal 2025, we repriced our Revolving Credit Facility and Term Loan B, which amended the 2022 Credit Agreement as follows: i. On March 20, 2024, we repriced our Term Loan B. The repricing reduced the margin from SOFR plus 3.75% to SOFR plus 3.25%. ii. On September 24, 2024, we repriced the Term Loan B.
The demand for our manufactured solutions and continued strength in pricing were the primary contributors to us reporting $87.2 million of net income attributable to common shareholders for the year ended February 29, 2024.
The demand for our manufactured solutions was the primary contributor to net income available to common shareholders of $52.4 million for the year ended February 28, 2025.
Corporate Expenses Corporate expenses increased $14.7 million, to $76.5 million for fiscal 2024, compared to $61.8 million for fiscal 2023.
Financial Statements and Supplementary Data—Note 22." Corporate Expenses Corporate expenses increased $6.7 million, to $83.2 million for fiscal 2025, compared to $76.5 million for fiscal 2024.
The increase in working capital is due primarily to an increase in accounts receivable, other receivables and inventories and a decrease in accounts payable and accrued expenses. Net cash provided by operating activities was used to fund $57.1 million of capital expenditures, and make dividend payments of $22.7 million.
The decrease in working capital is primarily due to an increase in accounts payable, accrued expenses and income taxes payable, as well as a decrease in inventories, other receivables and accounts receivable, due to improved management of collections of trade and other receivables, and due to improved management of inventory needs.
We have indirect exposure to copper, aluminum, steel and nickel-based alloys in the AZZ Infrastructure Solutions segment through our 40% investment in the AVAIL JV. Off Balance Sheet Arrangements and Contractual Commitments As of February 29, 2024, the Company did not have any off-balance sheet arrangements as defined under SEC rules.
Off Balance Sheet Arrangements and Contractual Commitments As of February 28, 2025, we did not have any off-balance sheet arrangements as defined under SEC rules.
Due to a prepayment of $210.0 million that we made on the Term Loan B during fiscal year 2023 in connection with the sale of the AIS business, the quarterly mandatory principal payment requirement has been met, and the quarterly payments of $3.25 million are not required at this time.
Additional prepayments made against the Term Loan B contribute to these required quarterly payments. Due to prepayments made against the Term Loan B since August 31, 2022, the quarterly mandatory principal payment requirement has been met, and the quarterly payments of $3.25 million are no longer required.
Financial Statements and Supplementary Data—Note 9" for more information. 28 Table of Contents Liquidity and Capital Resources We have historically met our cash needs through a combination of cash flows from operating activities along with bank and bond market debt. Our cash requirements generally include cash dividend payments, capital improvements, debt repayment and acquisitions.
The increase also relates to higher state tax expense, net of federal benefit, and lower R&D tax credits following the divestiture of the AIS business. 26 Table of Contents Liquidity and Capital Resources We have historically met our cash needs through a combination of cash flows from operating activities along with bank and bond market debt.
The increase is primarily due to amortization expense of $24.0 million related to intangible assets, which is included in corporate expense in the current year period and allocated to the segments in the prior year period; an increase due to a legal settlement in the current year period of $5.8 million; a decrease in transition services agreement fees associated with the AVAIL JV; and employee-related costs.
The increase is primarily due to: an increase in salaries and wages, due to retirement and other severance expense for certain executive management employees; increased incentive expense, due to improved performance of the Company; an increase in expenses related to the Company's employee stock purchase plan, due to the increase in AZZ's common stock price; a legal 25 Table of Contents settlement and other legal expenses related to a non-operating entity of $3.5 million; and transition services agreement fees associated with the AVAIL JV, which were received in the prior year, with no comparable receipt in the current year.
The dividend will increase annually by one percentage point, beginning with the dividend payable for the calendar quarter ending September 30, 2028. Dividends declared and paid for the year ended February 29, 2024 and February 28, 2023 were $14.4 million and $8.1 million, respectively.
All dividends were paid in cash through May 9, 2024, at which time the Series A Preferred Stock was redeemed. The dividend would have increased annually by one percentage point, beginning with the dividend payable for the calendar quarter ending September 30, 2028.
The weighted average interest rate for our outstanding debt, including the Revolving Credit Facility and the Term Loan B, was 8.58% at February 29, 2024. Our credit agreement required us to maintain a maximum Total Net Leverage Ratio (as defined in the loan agreement) no greater than 6.25 through November 2022.
As of February 28, 2025, the commitment fee rate was 0.225%. Our 2022 Credit Agreement requires us to maintain a maximum Total Net Leverage Ratio (as defined in the loan agreement) no greater than 4.5. As of February 28, 2025, we were in compliance with all covenants and other requirements set forth in the 2022 Credit Agreement.
Cost of sales increased $2.7 million, primarily due to higher labor and overhead costs, partially offset by a decrease in zinc costs and a change in classification of amortization of intangible assets of $7.1 million to the Corporate segment, from the AZZ Metal Coatings segment.
Cost of sales decreased $0.9 million, primarily due to a decrease in zinc costs, offset by higher labor and overhead costs. The decrease in selling, general and administrative expense was primarily due to a legal accrual and related expenses of $5.5 million recognized in the prior year.
Income Taxes The provision for income taxes from continuing operations was 21.9% for fiscal 2024 compared to 25.2% for fiscal 2023.
Income Taxes The provision for income taxes from continuing operations was 24.5% for fiscal 2025 compared to 21.9% for fiscal 2024. The increase in the effective tax rate is primarily attributable to favorable adjustments for fiscal 2024 related to uncertain tax positions, partially offset by higher tax deductions for stock compensation in fiscal 2025.
The repricing reduced the interest rate margin on all leveraged-based pricing tiers, to a range of SOFR plus 2.75% to 3.50% and removed the Credit Spread Adjustment, as defined in the 2022 Credit Agreement, of 10 basis points.
The repricing reduced the margin from SOFR plus 3.25% to SOFR plus 2.50%. iii. On February 27, 2025, we repriced the Revolving Credit Facility, which has a leverage-based rate with various tiers. The repricing reduced the interest rate tiers from SOFR plus 2.75% to 3.50% to SOFR plus 1.75% to 2.75%.
Interest Expense Interest expense for fiscal 2024 increased $18.3 million, to $107.1 million, as compared to $88.8 million in fiscal 2023.
Interest Expense Interest expense for fiscal 2025 decreased $25.8 million, to $81.3 million, as compared to $107.1 million in fiscal 2024. The decrease is primarily attributable to a decrease of $110.3 million in our weighted average debt outstanding and a decrease in the weighted average interest rate of 121 basis points.
Removed
On September 30, 2022, we contributed our AZZ Infrastructure Solutions business (the "AIS business"), excluding AZZ Crowley Tubing, to the AVAIL JV and sold a 60% interest to Fernweh AIS Acquisition LP.
Added
Fiscal year 2025 also includes an accrual related to a legal settlement and accrual related to a non-operating entity of $3.5 million, as well as retirement and other severance expenses of $3.7 million.
Removed
Following the transaction on September 30, 2022, we account for our retained investment in the AVAIL JV as an equity method investment, and our equity in the earnings of the AVAIL JV are included in continuing operations.
Added
Fiscal year 2024 also includes an accrual related to a legal settlement of $5.8 million for the settlement of a litigation matter that was acquired as part of the Precoat Acquisition and relates to the business activities that were discontinued prior to our acquisition.
Removed
Therefore, the results of operations for the AIS business for the period from March 1, 2022 through September 30, 2022 were reported as discontinued operations, and financial data was segregated and presented as discontinued operations for this period.
Added
(5) Cost of sales includes direct labor, materials, depreciation, amortization and overhead expenses directly related to providing our metal coatings solutions. (6) Selling, general and administrative includes compensation and benefits costs, professional expenses, insurance, computer, depreciation, amortization and other selling, general and administrative expenses.
Removed
The cash flows were used to make $95.1 million of capital investments in our business and return $31.4 million to our common and preferred shareholders through dividend payments. In addition, we reduced our outstanding debt through $115.0 million in net payments on our Term Loan B and revolving credit facility.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+2 added−0 removed4 unchanged
Biggest changeInterest Rates We had $1.0 billion of gross variable-rate debt outstanding as of February 29, 2024 under our revolving credit facility and Term Loan B. We manage our exposure to fluctuations in interest rates by utilizing interest rate swaps to convert the variable interest rate to a fixed rate on approximately one-half of our variable-rate debt.
Biggest changeWe have indirect exposure to copper, aluminum, steel and nickel-based alloys in the AZZ Infrastructure Solutions segment through our 40% investment in the AVAIL JV. Interest Rates We had $900.3 million of gross variable-rate debt outstanding as of February 28, 2025 under our revolving credit facility and Term Loan B.
However, there can be no assurance that either interest rates, foreign exchange rates or commodity prices will not change in excess of the 10% hypothetical amount or that we would be able to pass along rising costs of commodity prices to our customers, and such hypothetical change, if it occurred, could have an adverse effect on our results of operations, financial position, and cash flows. 38 Table of Contents
However, there can be no assurance that either interest rates, foreign exchange rates or commodity prices will not change in excess of the 10% hypothetical amount or that we would be able to pass along rising costs of commodity prices to our customers, and such hypothetical change, if it occurred, could have an adverse effect on our results of operations, financial position, and cash flows. 36 Table of Contents
Foreign Exchange Rates The Company’s foreign exchange exposures result primarily from intercompany balances, sale of manufactured solutions in foreign currencies, foreign currency denominated purchases, employee-related and other costs of running operations in foreign countries. As of February 29, 2024, the Company had exposure to foreign currency exchange rates related to our operations in Canada.
Foreign Exchange Rates The Company’s foreign exchange exposures result primarily from intercompany balances, sale of manufactured solutions in foreign currencies, foreign currency denominated purchases, employee-related and other costs of running operations in foreign countries. As of February 28, 2025, the Company had exposure to foreign currency exchange rates related to our operations in Canada.
We estimate that a hypothetical 10% increase in interest rates from their current level would have increased interest expense by $4.2 million and $5.8 million during fiscal 2024 and 2023, respectively.
We estimate that a hypothetical 10% increase in interest rates from their current level would have increased interest expense by $2.9 million and $4.2 million during fiscal 2025 and 2024, respectively.
Sensitivity Analysis The weighted average balance of variable interest debt outstanding, less the portion that is fixed through our interest rate swap agreement, was $483.3 million and $578.0 million as of February 29, 2024 and February 28, 2023, respectively.
Sensitivity Analysis The weighted average balance of variable interest debt outstanding, less the portion that is fixed through our interest rate swap agreement, was $370.6 million and $483.3 million as of February 28, 2025 and February 29, 2024, respectively.
We do not enter into or hold derivative instruments for speculative or trading purposes. Commodity Prices In our AZZ Metal Coatings segment, we have exposure to commodity price changes for zinc and natural gas, which are the primary inputs in the metal coatings process. In our Precoat Metals segment, we have exposure to commodity price changes for natural gas.
We do not enter into or hold derivative instruments for speculative or trading purposes. Commodity Prices We have exposure to commodity price increases in all three of our operating segments, primarily zinc and natural gas in the AZZ Metal Coatings segment, and natural gas, as well as steel and aluminum scrap, in the AZZ Precoat Metals segment.
We manage our exposure to changes in the price of zinc by entering into agreements with our zinc suppliers and such agreements generally include fixed premiums. We also secure firm pricing for natural gas supplies with individual utilities when possible. We believe these agreements ensure adequate supplies and partially offset exposure to commodity price escalation.
We attempt to minimize these increases by entering into agreements with our zinc suppliers and such agreements generally include fixed premiums, and by entering into agreements with our natural gas suppliers to fix a portion of our purchase cost.
Added
In addition to these measures, we attempt to recover other cost increases through improvements to our manufacturing process, supply chain management, and through increases in prices to match inflationary increases where competitively feasible. We believe these agreements ensure adequate supplies and partially offset exposure to commodity price escalation.
Added
We manage our exposure to fluctuations in interest rates on our floating-rate debt by entering into interest rate swap agreements to convert a portion of our variable-rate debt to a fixed rate.

Other AZZ 10-K year-over-year comparisons