AZZ INC

Previous wording

Certain statements herein about our expectations of future events or results constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by terminology such as "may," "could," "should," "expects," "plans," "will," "might," "would," "projects," "currently," "intends," "outlook," "forecasts," "targets," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. Such forward-looking statements are based on currently available competitive, financial, and economic data and management’s views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements. Forward-looking statements speak only as of the date they are made and are subject to risks that could cause them to differ materially from actual results. Certain factors could affect the outcome of the matters described herein. This Quarterly Report may contain forward-looking statements that involve risks and uncertainties including, but not limited to, changes in customer demand for our manufactured solutions, including demand by the construction markets, the industrial markets, and the metal coatings markets. We could also experience additional increases in labor costs, components and raw materials including zinc and natural gas, which are used in our hot-dip galvanizing process, paint used in our coil coating process; supply-chain vendor delays; customer requested delays of our manufactured solutions; delays in additional acquisition opportunities; an increase in our debt leverage and/or interest rates on our debt, of which a significant portion is tied to variable interest rates; availability of experienced management and employees to implement AZZ’s growth strategy; a downturn in market conditions in any industry relating to the manufactured solutions that we provide; economic volatility, including a prolonged economic downturn or macroeconomic conditions such as inflation or changes in the political stability in the United States and other foreign markets in which we operate; acts of war or terrorism inside the United States or abroad; and other changes in economic and financial conditions. AZZ has provided additional information regarding risks associated with the business, including in Part I, Item 1A. Risk Factors, in AZZ's Annual Report on Form 10-K for the fiscal year ended February 29, 2024 and other filings with the SEC, available for viewing on AZZ's website at www.azz.com and on the SEC's website at www.sec.gov.

Current wording

Certain statements herein about our expectations of future events or results constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by terminology such as "may," "could," "should," "expects," "plans," "will," "might," "would," "projects," "currently," "intends," "outlook," "forecasts," "targets," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. Such forward-looking statements are based on currently available competitive, financial, and economic data and management’s views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements. Forward-looking statements speak only as of the date they are made and are subject to risks that could cause them to differ materially from actual results. Certain factors could affect the outcome of the matters described herein. This Quarterly Report may contain forward-looking statements that involve risks and uncertainties including, but not limited to, changes in customer demand for our manufactured solutions, including demand by the construction markets, the industrial markets, and the metal coatings markets. We could also experience additional increases in labor costs, components and raw materials including zinc and natural gas, which are used in our hot-dip galvanizing process, paint used in our coil coating process; supply-chain vendor delays; customer requested delays of our manufactured solutions; delays in additional acquisition opportunities; an increase in our debt leverage and/or interest rates on our debt, of which a significant portion is tied to variable interest rates; availability of experienced management and employees to implement AZZ’s growth strategy; a downturn in market conditions in any industry relating to the manufactured solutions that we provide; economic volatility, including a prolonged economic downturn or macroeconomic conditions such as inflation or changes in the political stability in the United States and other foreign markets in which we operate; tariffs, acts of war or terrorism inside the United States or abroad; and other changes in economic and financial conditions. AZZ has provided additional information regarding risks associated with the business, including in Part I, Item 1A. Risk Factors, in AZZ's Annual Report on Form 10-K for the fiscal year ended February 28, 2025 and other filings with the SEC, available for viewing on AZZ's website at www.azz.com and on the SEC's website at www.sec.gov.

Previous wording

Our results for the nine months ended November 30, 2024 (the "current nine-month period") were favorably impacted by the growth in demand for our manufactured solutions in the construction andutilities industries.

Current wording

Our results for the three months ended May 31, 2025 (the "current quarter") were favorably impacted primarily by the recognition of equity in earnings for the excess distribution from the AVAIL JV, and by the growth in demand for our manufactured solutions in the construction andutilities industries.

Previous wording

The demand for our manufactured solutions was the primary contributor to net income of $108.6 million for the nine months ended November 30, 2024. Our operating results for the three and nine months ended November 30, 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."

Current wording

The equity in earnings recognized following the AVAIL JV distribution was the primary contributor to net income of $170.9 million for the three months ended May 31, 2025. Our operating results for three months ended May 31, 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."

Previous wording

Our operations generated $185.6 million of cash for the current nine-month period. 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."

Current wording

Our operations generated $314.8 million of cash for the current three-month period. 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."

Previous wording

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, several factors are outlined below that may impact our results of operations during the fourth quarter of fiscal 2025.

Current wording

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 second quarter of fiscal 2026.

Previous wording

•Sales prices in our AZZ Precoat Metals segment are expected to remain consistent with current levels, although fluctuations in mix may impact the average selling price.

Current wording

•Sales prices in our AZZ Precoat Metals segment are expected to increase on average from past levels, resulting from passing through higher pricing on specified materials along with increased overall selling prices, although fluctuations in mix may impact the average selling price.

Previous wording

For the three months ended November 30, 2024 (the "current quarter"), consolidated sales increased $22.0 million, or 5.8%, compared to the three months ended November 30, 2023 (the "prior year quarter").

Current wording

For the current quarter, consolidated sales increased $8.8 million, or 2.1%, compared to the three months ended May 31, 2024 (the "prior year quarter").

Previous wording

Sales for the AZZ Metal Coatings segment increased $5.4 million, or 3.3%, for the current quarter, compared to the prior year quarter. The increase was primarily due to $9.9 million resulting from a higher volume of steel processed, partially offset by a decrease in selling price of $2.5 million, due to product mix. Other sales decreased $2.0 million.

Current wording

Sales for the AZZ Metal Coatings segment increased $10.6 million, or 6.0%, for the current quarter, compared to the prior year quarter. The increase was primarily due to $11.7 million resulting from a higher volume of steel processed, and an increase in other sales of $0.4 million, partially offset by a decrease in selling price of $1.5 million, due to product mix.

Previous wording

Sales for the AZZ Precoat Metals segment increased $16.6 million, or 7.6% for the current quarter. The increase is due to a higher volume of coil coated in the current quarter, compared to the prior year quarter, and an increase in the average price due to product mix.

Current wording

Sales for the AZZ Precoat Metals segment decreased $1.8 million, or 0.8% for the current quarter, compared to the prior year quarter. The decrease is due to a lower volume of coil coated and a decrease in other sales of $0.4 million, partially offset by an increase in the average price due to product mix.

Previous wording

For the current quarter, consolidated operating income was $58.5 million, an increase of $5.7 million, or 10.8%, compared to the prior year quarter.

Current wording

For the current quarter, consolidated operating income was $69.5 million, a decrease of $0.2 million, or 0.3%, compared to the prior year quarter.

Previous wording

Operating income for the AZZ Metal Coatings segment increased $8.5 million, or 22.5%, for the current quarter, compared to the prior year quarter. The increase was due to increased sales as described above, partially offset by an increase in cost of sales. The increase in cost of sales of $0.6 million was primarily due to a $3.1 million increase in overhead costs and a $0.8 million increase in labor costs, partially offset by a $3.4 million decrease in zinc cost. Selling, general and administrative expense decreased $3.7 million, due to a legal reserve in the prior year, partially offset by an increase in compensation costs.

Current wording

Operating income for the AZZ Metal Coatings segment increased $2.8 million, or 5.8%, for the current quarter, compared to the prior year quarter. The increase was due to increased sales as described above, partially offset by an increase in cost of sales. The increase in cost of sales of $7.6 million was primarily due to a $4.8 million increase in overhead costs, a $1.5 million increase in labor costs, and a $2.1 million increase in zinc cost. The increase in overhead costs was primarily due to restructuring charges of $3.8 million for two surface technology facilities. Selling, general and administrative expense increased $0.4 million, driven by an increase in stock-based compensation and the recognition of bad debt expense in the current quarter, compared to prior year quarter.

Previous wording

Operating income for the AZZ Precoat Metals segment increased $4.3 million, or 13.2% for the current quarter. The increase is primarily due to increased sales as described above, offset by higher cost of sales. Cost of sales increased $11.8 million, primarily due to variable costs related to the increased volume of coil coated and an increase in fixed costs. Selling, general and administrative expense increased $0.5 million.

Current wording

Operating income for the AZZ Precoat Metals segment decreased $0.7 million, or 1.8% for the current quarter, compared to the prior year quarter. The decrease is primarily due to decreased sales as described above, offset by a decrease in cost of sales of $0.3 million, primarily due to variable costs related to the decreased volume of coil coated, and a decrease in selling, general and administrative expense of $0.7 million.

Previous wording

Interest expense for the current quarter decreased $6.6 million, to $19.2 million, compared to $25.9 million for the prior year quarter. The decrease in interest expense is primarily attributable to a decrease in the weighted average debt outstanding of $111.2 million and a decrease in the weighted average interest rate of 1.3% in the current quarter compared to the prior year quarter, coupled with higher capitalized interest of $1.1 million associated with the construction of the new plant in Washington, Missouri.

Current wording

Interest expense for the current quarter decreased $4.2 million, to $18.6 million, compared to $22.8 million for the prior year quarter. The decrease in interest expense is primarily attributable to a decrease in the weighted average debt outstanding of $96.6 million and a decrease in the weighted average interest rate of 2.29% in the current quarter, compared to the prior year quarter. The decrease in interest expense is partially offset by lower capitalized interest associated with the construction of the new plant in Washington, Missouri, for the current quarter, compared to the prior year quarter.

Previous wording

See Note 7 of our consolidated financial statements for more information about the AVAIL JV.

Current wording

Equity in earnings of unconsolidated subsidiaries for the current quarter increased $169.7 million, to $173.5 million, compared to $3.8 million in the prior year quarter. The increase is due to the recognition of a gain for a distribution in excess of our investment balance of $165.8 million from the AVAIL JV, following the sale of their Electrical Products Group in the current quarter. See "Item I. Financial Statements—Note 7" for more information about the AVAIL JV.

Previous wording

The provision for income taxes reflects an effective tax rate of 24.8% for the current nine-month period compared to 22.6% for the prior year nine-month period. The increase in the effective tax rate is primarily attributable to favorable adjustments for the prior year nine-month period related to uncertain tax positions, partially offset by higher discrete items driven by tax deductions for stock compensation in fiscal year 2025. The increase is also attributable to the increase in state tax expense, net of federal benefit.

Current wording

The provision for income taxes reflects an effective tax rate of 24.3% for the current quarter, compared to 22.4% for the prior year quarter. The increase in the effective tax rate is primarily attributable to the AVAIL JV distribution's impact to earnings and tax expense, partially offset by higher discrete items driven by tax deductions for stock compensation.

Previous wording

We have historically met our cash needs through a combination of cash flows from operating activities along with equity from capital markets and from bank and bond market debt. Our cash requirements generally include quarterly cash dividend payments, capital improvements and debt repayment. We believe that our cash position, cash flows from operating activities, access to capital markets and our expectation of continuing availability to draw upon our credit facilities are sufficient to meet our cash flow needs for the foreseeable future.

Current wording

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. Based on our current financial condition and current operations, we believe that our cash position, cash flows from operating activities and our expectation of continuing availability to draw upon our credit facilities are sufficient to meet our cash flow needs for the foreseeable future.

Previous wording

As of November 30, 2024, our total liquidity of $347.2 million consisted of available capacity on our Revolving Credit Facility of $345.7 million and cash and cash equivalents of $1.5 million.

Current wording

As of May 31, 2025, our total liquidity of $309.4 million consisted of available capacity on our Revolving Credit Facility of $306.3 million and cash and cash equivalents of $3.0 million.

Previous wording

Net cash provided by operating activities for the current nine-month period was $185.6 million, driven primarily by net income from continuing operations of $108.6 million, adjusted to exclude non-cash charges, net of non-cash income of $69.1 million, an increase in cash resulting from a reduction in working capital of $2.9 million, a decrease in cash resulting from changes in other long-term assets and liabilities, including deferred taxes, of $1.8 million and a cash distribution received on the investment in the AVAIL JV of $6.8 million. The reduction in working capital is due primarily to increases in accounts payable, other accrued liabilities and income taxes payable, as well as a reduction in inventories and accounts receivable; partially offset by increases in other receivables, prepaid expenses and contract assets due to higher sales. Net cash provided by operating activities was used to fund $85.9 million of capital expenditures, make net payments on long-term debt and finance leases liabilities of $82.2 million, make dividend payments of $18.0 million and make payments for taxes related to net share settlement of equity awards of $5.0 million. We also completed a secondary public offering of 4.6 million shares of our common stock, which provided cash, net of offering costs, of $310.2 million, which was used to redeem our 240,000 shares of Series A Preferred Stock for $308.9 million.

Current wording

Net cash provided by operating activities for the current three-month period was $314.8 million, driven primarily by net income of $170.9 million, adjusted to exclude non-cash charges, net of non-cash income of $142.0 million, a cash distribution received on the investment in the AVAIL JV of $273.2 million, an increase in cash resulting from a reduction in working capital of $17.8 million, and a decrease in cash resulting from changes in other long-term assets and liabilities, including deferred taxes, of $5.1 million. The reduction in working capital is due primarily to increases in accounts payable, other accrued liabilities and income taxes payable, as well as a reduction in inventories; partially offset by increases in accounts receivable, prepaid expenses and contract assets due to higher sales. Net cash provided by operating activities was used to fund $20.9 million of capital expenditures, make net payments on long-term debt and finance leases of $285.8 million, make dividend payments of $5.1 million and make payments for taxes related to net share settlement of equity awards of $4.6 million.

Previous wording

Net cash provided by operating activities for the prior year nine-month period was $180.9 million, driven primarily by net income of $83.7 million, adjusted to exclude non-cash charges, net of non-cash income of $63.3 million and an increase in cash resulting from an decrease in working capital of $38.8 million, partially offset by a decrease in cash resulting from other long-term assets and liabilities, including deferred taxes, of $4.9 million. Net cash provided by operating activities was used to fund $66.9 million of capital expenditures, make net payments on long-term debt and finance leases liabilities of $86.6 million, make dividend payments of $23.6 million and make payments for taxes related to net share settlement of equity awards of $0.8 million.

Current wording

Net cash provided by operating activities for the prior year three-month period was $71.9 million, driven primarily by net income of $39.6 million, adjusted to exclude non-cash charges, net of non-cash income of $22.5 million and an increase in cash resulting from an decrease in working capital of $7.6 million, partially offset by a decrease in cash resulting from other long-term assets and liabilities, including deferred taxes, of $1.7 million. Net cash provided by operating activities was used to fund $27.4 million of capital expenditures, make net payments on long-term debt and finance leases liabilities of $25.2 million, make dividend payments of $7.9 million and make payments for taxes related to net share settlement of equity awards of $4.6 million.

Previous wording

We have a credit agreement with a syndicate of financial institutions that was entered into on May 13, 2022, and was subsequently amended on August 17, 2023, December 20, 2023, March 20, 2024 and September 24, 2024 (collectively referred to herein as the "2022 Credit Agreement").

Current wording

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").

Previous wording

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 November 30, 2024, the outstanding balance of the Term Loan B was $890.3 million;

Current wording

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 May 31, 2025, the outstanding balance of the Term Loan B was $534.9 million;

Previous wording

ii. provides for a maximum senior secured Revolving Credit Facility in the aggregate principal amount of $400.0 million (the "Revolving Credit Facility"), which matures on May 13, 2027;

Current wording

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;

Previous wording

v. 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 2.75% and 3.50%; as of November 30, 2024, the interest rate was SOFR plus 2.75%;

Current wording

iv. borrowings under the Term Loan B bear an interest rate of Secured Overnight Financing Rate ("SOFR") plus 2.50% and the Revolving Credit Facility bears a leverage-based rate with various tiers between 1.75% and 2.75%; as of May 31, 2025, the interest rate was SOFR plus 2.00%;

Previous wording

The weighted average interest rate for our outstanding debt, including the Revolving Credit Facility and the Term Loan B, was 7.77% and 8.54% for the nine months ended November 30, 2024 and 2023, respectively.

Current wording

The weighted average interest rate for our outstanding debt, including the Revolving Credit Facility and the Term Loan B, was 6.78% and 8.09% for the three months ended May 31, 2025 and 2024, respectively.

Previous wording

As of November 30, 2024, we had $930.3 million of debt outstanding on the Revolving Credit Facility and the Term Loan B, with varying maturities through fiscal 2029. We had approximately $345.7 million of additional credit available as of November 30, 2024.

Current wording

As of May 31, 2025, we had $614.9 million of debt outstanding on the Revolving Credit Facility and the Term Loan B, with varying maturities through fiscal 2030. We had approximately $306.3 million of additional credit available as of May 31, 2025.

Previous wording

As of November 30, 2024, we had total outstanding letters of credit in the amount of $14.3 million. These letters of credit are most commonly issued in lieu of customer retention withholding payments covering warranty, performance periods and insurance collateral.

Current wording

As of May 31, 2025, we had total outstanding letters of credit in the amount of $13.7 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.

Previous wording

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. 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%. On September 24, 2024, we repriced our Term Loan B to SOFR plus 2.50%, resulting in a total fixed rate of 6.777%. See "2022 Credit Agreement and Term Loan B" section abovefor information related to the repricing of the Company's Term Loan B on September 24, 2024. 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, and the current notional amount is $537.6 million as of November 30, 2024. The objective of the 2022 Swap is to eliminate the variability of cash flows in interest payments attributable to changes in benchmark one-month SOFR interest rates, for a portion of our variable-rate debt. The hedged risk is the interest rate risk exposure to changes in interest payments, attributable to changes in benchmark one-month SOFR interest rates over the interest rate swap term. The changes in cash flows of the 2022 Swap exactly offset changes in cash flows of the variable-rate debt. We designated the 2022 Swap as a cash flow hedge at inception. Cash payments or receipts to settle the 2022 Swap are recognized in interest expense.

Current wording

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. On September 27, 2022, we entered into a fixed-rate interest rate swap agreement, which was subsequently amended on October 7, 2022, 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%. As of May 31, 2025, the 2022 swap resulted in a total fixed rate of 6.777%. 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, and the notional amount is $536.3 million as of February 28, 2025. The objective of the 2022 Swap is to eliminate the variability of cash flows in interest payments attributable to changes in benchmark one-month SOFR interest rates. The hedged risk is the interest rate risk exposure to changes in interest payments, attributable to changes in benchmark one-month SOFR interest rates over the interest rate swap term. The changes in cash flows of the interest rate swap are expected to exactly offset changes in cash flows of the variable-rate debt. We designated the 2022 Swap as a cash flow hedge at inception. Cash settlements, in the form of cash payments or cash receipts, of the 2022 Swap are recognized in interest expense.

Previous wording

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). 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. We expect to spend approximately $124.0 million in capital payments over the life of the project, of which $60.8 million was paid prior to fiscal 2025 and $46.8 million was paid during the nine months ended November 30, 2024. The remaining balance of $16.4 million is on schedule to occur by the first quarter of fiscal 2026, of which we have capital commitments of $9.7 million. The remaining payments through fiscal 2026 are expected to be funded through cash flows from operations.

Current wording

We are expanding our coatings capabilities through the construction of a new 25-acre aluminum coil coating facility in Washington, Missouri, which was became operational during the first quarter of fiscal 2026. The new greenfield facility is 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. We expect to spend approximately $121.8 million in capital payments over the life of the project, of which $113.6 million was paid prior to fiscal 2026 and $3.2 million was paid during the three months ended May 31, 2025. The remaining balance of $5.0 million is on schedule to occur by the second quarter of fiscal 2026, for which we have capital commitments of $5.0 million. The remaining payments through fiscal 2026 are expected to be funded through cash flows from operations.

Previous wording

During the nine months ended November 30, 2024 and 2023, we did not repurchase shares of common stock under the 2020 Share Authorization. As of November 30, 2024, we had $53.2 million available under the 2020 Share Authorization that may be used to purchase shares in the future. See "Part II. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.”

Current wording

During the three months ended May 31, 2025, we did not repurchase shares of common stock under the 2020 Share Authorization. As of May 31, 2025, there was $53.2 million remaining to repurchase shares under the 2020 Authorization. See "Part II. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.”

Previous wording

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. 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. 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 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.

Current wording

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 scrap in the AZZ Precoat Metals segment. 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. 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 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.

Previous wording

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires us to make judgments, assumptions, and estimates that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes.

Current wording

The preparation of financial statements and related disclosures in conformity 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.

Previous wording

In addition to reporting financial results in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"), we provide adjusted net income, adjusted earnings per share and Adjusted EBITDA (collectively, the "Adjusted Earnings Measures"), which are non-GAAP measures. 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 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.

Current wording

In addition to reporting financial results in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"), we provide adjusted net income, adjusted earnings per share and Adjusted EBITDA (collectively, the "Adjusted Earnings Measures"), which are non-GAAP measures. 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. 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.

Previous wording

Management defines adjusted net income and adjusted earnings per share to exclude intangible asset amortization, acquisition expenses, transaction related expenses, certain legal settlements and accruals, and certain expenses related to non-recurring events from the reported GAAP measure. Management defines Adjusted EBITDA as adjusted earnings excluding depreciation, amortization, interest and provision for income taxes. 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.

Current wording

Management defines adjusted net income and adjusted earnings per share to exclude intangible asset amortization, restructuring charges, and additional stock compensation expense related to the adoption of our executive retiree long-term incentive program 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. 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.

Previous wording

The following tables provide a reconciliation for the three and nine months ended November 30, 2024 and 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):

Current wording

The following tables provide a reconciliation for the three months ended May 31, 2025 and 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):