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; 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.

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, including increases due to inflation, 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; 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 six months ended August 31, 2025 (the "current six-month period") were favorably impacted primarily by the recognition of equity in earnings for the AVAIL JV, which included the gain from AVAIL's sale of the Electrical Products Group business to nVent Electric plc., and by the growth in demand for our manufactured solutions in the construction andutilities industries.

Current wording

Our results for the nine months ended November 30, 2025 (the "current nine-month period") were favorably impacted primarily by the recognition of equity in earnings for the AVAIL JV, which included the gain from AVAIL's sale of the Electrical Products Group business to nVent Electric plc., and by the growth in demand for our manufactured solutions in the utilities, construction and consumer industries.

Previous wording

The equity in earnings from the AVAIL JV was the primary contributor to net income of $260.3 million for the current six-month period. Our operating results for the current six-month period, 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 from the AVAIL JV was the primary contributor to net income of $301.3 million for the current nine-month period. Our operating results for the current nine-month period, 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 $373.2 million of cash for the current six-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 $452.9 million of cash for the current nine-month period. The components of our liquidity and descriptions of our cash flows, capital investments, and other utilities, construction and 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, we have noted several factors below that have impacted or may impact our results of operations during the third quarter of fiscal 2026.

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 fourth quarter of fiscal 2026.

Previous wording

•Sales prices in our AZZ Metal Coatings segment are expected to remain consistent with current levels. Fluctuations in product mix, along with competitive market pressures, may impact selling price.

Current wording

•Sales prices in our AZZ Metal Coatings and AZZ Precoat Metals segment are expected to remain consistent with current levels. Fluctuations in product mix, along with competitive market pressures, may impact selling price.

Previous wording

For the three months ended August 31, 2025 (the "current quarter"), consolidated sales increased $8.3 million, or 2.0%, compared to the three months ended August 31, 2024 (the "prior year quarter").

Current wording

For the three months ended November 30, 2025 (the "current quarter"), consolidated sales increased $22.1 million, or 5.5%, compared to the three months ended November 30, 2024 (the "prior year quarter").

Previous wording

Sales for the AZZ Metal Coatings segment increased $18.5 million, or 10.8%, for the current quarter, compared to the prior year quarter. The increase was primarily due to $22.1 million resulting from a higher volume of steel processed, partially offset by a decrease in selling price of $2.8 million, due to product mix, and a decrease in other sales of $0.9 million.

Current wording

Sales for the AZZ Metal Coatings segment increased $26.4 million, or 15.7%, for the current quarter, compared to the prior year quarter. The increase was primarily due to $30.0 million resulting from a higher volume of steel processed and an increase in other sales of $2.1 million, partially offset by a decrease in selling price of $5.7 million due to product mix.

Previous wording

Sales for the AZZ Precoat Metals segment decreased $10.2 million, or 4.3% for the current quarter, compared to the prior year quarter. The decrease is due to a lower volume of coil coated, partially offset by an increase in the average price due to vendor price increases that were passed through to the customer.

Current wording

Sales for the AZZ Precoat Metals segment decreased $4.3 million, or 1.8% for the current quarter, compared to the prior year quarter. The decrease is due to a lower volume of coil coated, partially offset by an increase in the average price due to vendor price increases that were passed through to the customer.

Previous wording

For the current quarter, consolidated operating income was $68.5 million, an increase of $0.8 million, or 1.2%, compared to the prior year quarter.

Current wording

For the current quarter, consolidated operating income was $69.5 million, an increase of $10.9 million, or 18.7%, compared to the prior year quarter.

Previous wording

Operating income for the AZZ Metal Coatings segment increased $4.0 million, or 8.4%, for the current quarter, compared to the prior year quarter. The increase was due to increased sales as described above, offset by an increase in cost of sales. The increase in cost of sales of $14.7 million was primarily due to a $7.9 million increase in variable costs, a $4.8 million increase in zinc cost, and a $2.6 million increase in labor costs, offset by a decrease in other direct costs of $0.6 million. Selling, general and administrative expense decreased $0.3 million.

Current wording

Operating income for the AZZ Metal Coatings segment increased $5.7 million, or 12.3%, for the current quarter, compared to the prior year quarter. The increase was due to increased sales as described above, offset by an increase in cost of sales. The increase in cost of sales of $20.3 million was primarily due to a $6.6 million increase in variable costs, a $5.5 million increase in zinc cost, and a $3.9 million increase in labor costs and an increase in other overhead costs of $4.3 million. Selling, general and administrative expense increased $0.3 million.

Previous wording

Operating income for the AZZ Precoat Metals segment decreased $6.0 million, or 14.1% for the current quarter, compared to the prior year quarter. Thedecrease was primarily due to decreased sales as described above. In addition, cost of sales decreased by $4.2 million, primarily due to variable costs related to the decreased volume of coil coated, partially offset by an increase in cost of sales for the new plant in Washington, Missouri, which became operational during the first quarter of fiscal 2026.

Current wording

Operating income for the AZZ Precoat Metals segment decreased $1.2 million, or 3.2% for the current quarter, compared to the prior year quarter. Thedecrease was primarily due to decreased sales as described above. In addition, cost of sales decreased by $2.4 million, primarily due to a decrease in material costs related to the decreased volume of coil coated, partially offset by an increase in cost of sales for the new plant in Washington, Missouri, which became operational during the first quarter of fiscal 2026.

Previous wording

Corporate selling, general and administrative expenses decreased $2.8 million, or 12.5%, for the current quarter, compared to the prior year quarter. The decrease was primarily due to decreases in salaries and wages, employee benefits and stock-based compensation, primarily due to retirement and other severance costs recognized in the prior year.

Current wording

Corporate selling, general and administrative expenses decreased $6.4 million, or 25.8%, for the current quarter, compared to the prior year quarter. The decrease was primarily due to decreases in salaries and wages, employee benefits and stock-based compensation, primarily due to retirement and other severance costs recognized in the prior year.

Previous wording

Interest expense for the current quarter decreased $8.2 million, to $13.7 million, compared to $21.9 million for the prior year quarter. The decrease in interest expense was primarily attributable to a decrease in the weighted average debt outstanding of $304.4 million and a decrease in the weighted average interest rate of 1.77% 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.

Current wording

Interest expense for the current quarter decreased $7.0 million, to $12.2 million, compared to $19.2 million for the prior year quarter. The decrease in interest expense was primarily attributable to a decrease in the weighted average debt outstanding of $339.8 million and a decrease in the weighted average interest rate of 1.76% 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

Equity in earnings of unconsolidated subsidiaries for the current quarter increased $57.9 million to $59.3 million, compared to $1.5 million in the prior year quarter. The increase was due to the recognition of a gain of $109.4 million following the sale of AVAIL's Electrical Products Group, offset by an impairment loss of $45.9 million recognized on the AVAIL JV to reduce the carrying value to estimated fair value, and a decrease in our proportionate share of net losses of $5.6 million. See "Item I. Financial Statements—Note 8" for more information about the AVAIL JV.

Current wording

Equity in earnings of unconsolidated subsidiaries for the current quarter decreased $8.6 million to a loss of $1.4 million, compared to income of $7.2 million in the prior year quarter. The decrease was due to AVAIL's lower income for the quarter following the sale of the Electrical Products Group business. See "Item I. Financial Statements—Note 8" for more information about the AVAIL JV.

Previous wording

For the current six-month period, consolidated sales increased $17.0 million, or 2.1%, compared to the six months ended August 31, 2024 (the "prior year six-month period").

Current wording

For the current nine-month period, consolidated sales increased $39.1 million, or 3.2%, compared to the nine months ended November 30, 2024 (the "prior year nine-month period").

Previous wording

Sales for the AZZ Metal Coatings segment increased $29.0 million, or 8.3%, for the current six-month period, compared to the prior year six-month period. Theincrease in sales was primarily due to an increase of $33.8 million resulting from a higher volume of steel processed during the period, partially offset by a decrease of $4.3 million in selling price, due to product mix. Other sales decreased $0.4 million.

Current wording

Sales for the AZZ Metal Coatings segment increased $55.4 million, or 10.7%, for the current nine-month period, compared to the prior year nine-month period. Theincrease in sales was primarily due to an increase of $63.7 million resulting from a higher volume of steel processed during the period, partially offset by a decrease of $9.8 million in selling price, due to product mix. Other sales increased $1.5 million.

Previous wording

Sales for the AZZ Precoat Metals segment decreased $12.0 million, or 2.5% for the current six-month period, primarily due to a lower volume of coil coated, partially offset by an increase in selling price due to vendor price increases that were passed through to the customer.

Current wording

Sales for the AZZ Precoat Metals segment decreased $16.3 million, or 2.3% for the current nine-month period, primarily due to a lower volume of coil coated, partially offset by an increase in selling price due to vendor price increases that were passed through to the customer.

Previous wording

For the current six-month period, consolidated operating income increased $0.6 million, or 0.4%, to $138.0 million, compared to the prior year six-month period.

Current wording

For the current nine-month period, consolidated operating income increased $11.6 million, or 5.9%, to $207.5 million, compared to the prior year nine-month period.

Previous wording

Operating income for the AZZ Metal Coatings segment increased $6.8 million, or 7.1% for the current six-month period, compared to the prior year six-month period. Theincrease was due to improved sales as described above, and lower selling, general and administrative expenses, partially offset by higher cost of sales. Cost of sales increased $22.4 million, prim arily due to higher labor and variable costs of $15.4 million, and increased zinc costs of $6.9 million. Selling, general and administrative expense decreased $0.2 million.

Current wording

Operating income for the AZZ Metal Coatings segment increased $12.5 million, or 8.8% for the current nine-month period, compared to the prior year nine-month period. Theincrease was due to improved sales as described above, and lower selling, general and administrative expenses, partially offset by higher cost of sales. Cost of sales increased $42.7 million, prim arily due to an $8.0 million increase in labor costs, increased overhead costs of $22.8 million, and increased zinc costs of $11.9 million. Selling, general and administrative expense decreased $0.2 million.

Previous wording

Operating income for the AZZ Precoat Metals segment decreased $6.7 million, or 8.2%. The decrease was primarily due to the decrease in sales as described above. In addition, cost of sales decreased by $4.6 million, prima rily due to variable costs related to the decreased volume of coil coated, partially offset by an increase in cost of sales for the new plant in Washington, Missouri, which became operational during the first quarter of fiscal 2026.

Current wording

Operating income for the AZZ Precoat Metals segment decreased $7.9 million, or 6.6%. The decrease was primarily due to the decrease in sales as described above. In addition, cost of sales decreased by $7.0 million, prima rily due to a decrease in material costs related to the decreased volume of coil coated, partially offset by an increase in cost of sales for the new plant in Washington, Missouri, which became operational during the first quarter of fiscal 2026.

Previous wording

Corporate selling, general and administrative expenses decreased $0.6 million, or 1.5%, for the current six-month period, compared to the prior year six-month period. The decrease was primarily due to decreases in compensation costs, primarily due to retirement and other severance costs recognized in the prior year, partially offset by an increase in stock-based compensation in the current six-month period, primarily due to the adoption of the Executive Retiree LTI Program and the acceleration of expense for the related stock awards.

Current wording

Corporate selling, general and administrative expenses decreased $7.0 million, or 10.7%, for the current nine-month period, compared to the prior year nine-month period. The decrease was primarily due to decreases in compensation costs, primarily due to retirement and other severance costs recognized in the prior year, partially offset by an increase in stock-based compensation in the current nine-month period, primarily due to the adoption of the Executive Retiree LTI Program and the acceleration of expense for the related stock awards.

Previous wording

Interest expense for the current six-month period decreased $12.5 million, to $32.2 million, compared to $44.7 million for the prior year six-month period. The decrease in interest expense is primarily attributable to a decrease in the weighted average debt outstanding of $136.4 million anda decrease in the weighted average interest rate of 1.54% in the current six-month period compared to the prior year six-month period, partially offset by lower capitalized interest associated with the construction of the new plant in Washington, Missouri.

Current wording

Interest expense for the current nine-month period decreased $19.5 million, to $44.4 million, compared to $63.9 million for the prior year nine-month period. The decrease in interest expense is primarily attributable to a decrease in the weighted average debt outstanding of $198.4 million anda decrease in the weighted average interest rate of 1.61% in the current nine-month period compared to the prior year nine-month period, partially offset by lower capitalized interest in the current nine-month period associated with the construction of the new plant in Washington, Missouri.

Previous wording

Equity in earnings of unconsolidated subsidiaries for the current six-month period increased $227.6 million, to $232.9 million, compared to $5.3 million in the prior year six-month period. The increase is due to $275.2 million of a gain from the sale of the Electrical Products Group, offset by an impairment loss of $45.9 million on the AVAIL JV, both in the current six-month period, and a decrease of $1.7 million of equity in earnings from the AVAIL JV's operations for the current six-month period, compared to the prior year six-month period. See "Item I. Financial Statements—Note 8" for more information about the AVAIL JV.

Current wording

Equity in earnings of unconsolidated subsidiaries for the current nine-month period increased $219.0 million, to $231.4 million, compared to $12.5 million in the prior year nine-month period. The increase is due to a gain from the sale of the Electrical Products Group, partially offset by an impairment loss recognized on the AVAIL JV in the second quarter of fiscal 2026 and lower earnings following the sale of the electrical business. See "Item I. Financial Statements—Note 8" for more information about the AVAIL JV.

Previous wording

The provision for income taxes reflects an effective tax rate of 23.5% for the six months ended August 31, 2025 compared to 23.9% for the prior year comparable period. The decrease in the effective tax rate is primarily attributable to higher R&D tax credits related to the construction of the new aluminum coil coating facility in Washington, Missouri, which became operational during the first quarter of fiscal 2026.

Current wording

The provision for income taxes reflects an effective tax rate of 23.9% for the nine months ended November 30, 2025 compared to 24.8% for the prior year comparable period. The decrease in the effective tax rate is primarily attributable to higher R&D tax credits related to the construction of the new aluminum coil coating facility in Washington, Missouri, which became operational during the first quarter of fiscal 2026.

Previous wording

As of August 31, 2025, our total liquidity of $362.2 million consisted of available capacity on our Revolving Credit Facility and Receivables Securitization Facility of $361.3 million and cash and cash equivalents of $0.9 million.

Current wording

As of November 30, 2025, our total liquidity of $337.1 million consisted of available capacity on our Revolving Credit Facility of $336.4 million and cash and cash equivalents of $0.6 million.

Previous wording

Net cash provided by operating activities for the current six-month period was $373.2 million, driven primarily by net income of $260.3 million, adjusted to exclude non-cash charges, net of non-cash income of $171.7 million, a cash distribution received on the investment in the AVAIL JV of $273.2 million, a decrease in cash resulting from an increase in working capital of $5.7 million, and an increase in cash resulting from changes in other long-term assets and liabilities, including deferred taxes, of $17.1 million. The increase in working capital is due primarily to decreases in accrued liabilities and increases in accounts receivable and prepaid expenses, offset by increases in accounts payable and income taxes payable, and decreases in inventories and contract assets. Net cash provided by operating activities was used to fund $40.2 million of capital expenditures, make net payments on long-term debt and finance leases of $291.4 million, make dividend payments of $11.1 million and make payments for taxes related to net share settlement of equity awards of $5.0 million.

Current wording

Net cash provided by operating activities for the current nine-month period was $452.9 million, driven primarily by net income of $301.3 million, adjusted to exclude non-cash charges, net of non-cash income of $141.6 million, a cash distribution received on the investment in the AVAIL JV of $273.2 million, an increase in cash resulting from a decrease in working capital of $0.5 million, and an increase in cash resulting from changes in other long-term assets and liabilities, including deferred taxes, of $19.4 million. The decrease in working capital is due primarily to increases in accounts payable, income taxes payable, and decreased inventories, offset by increases in accounts receivable, contract assets, prepaid expenses and a decrease in accrued liabilities. Net cash provided by operating activities was used to fund $58.7 million of capital expenditures, fund an acquisition of $30.1 million, make net payments on long-term debt and finance leases of $327.1 million, repurchase $20.0 million of common stock, make dividend payments of $17.1 million and make payments for taxes related to net share settlement of equity awards of $5.0 million. Other increases in cash included proceeds from sales of property, plant, and equipment of $3.9 million.

Previous wording

Net cash provided by operating activities for the prior year six-month period was $119.4 million, driven primarily by net income of $75.0 million, adjusted to exclude non-cash charges, net of non-cash income of $48.6 million and a decrease in cash resulting from an increase in working capital of $8.5 million, partially offset by a decrease in cash resulting from other long-term assets and liabilities, including deferred taxes, of $0.9 million. Net cash provided by operating activities was used to fund $59.5 million of capital expenditures, make net payments on long-term debt and finance leases liabilities of $45.4 million, make dividend payments of $12.9 million and make payments for taxes related to net share settlement of equity awards of $5.0 million.

Current wording

Net cash provided by operating activities for the prior year nine-month period was $185.6 million, driven primarily by net income 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, partially offset by 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.

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 August 31, 2025, the outstanding balance of the Term Loan B was $434.9 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 November 30, 2025, the outstanding balance of the Term Loan B was $374.9 million;

Previous wording

On July 10, 2025, we entered into a credit agreement secured by our accounts receivable (the "Receivables Securitization Facility.") Under this arrangement, we transferred our trade receivables to a special purpose entity ("SPE"), which in turn pledged those receivables as collateral for borrowings under the facility. The transaction does not qualify as a sale under ASC 860, Transfers and Servicing; as a result, the arrangement is accounted for as a secured borrowing.

Current wording

On July 10, 2025, we entered into a credit agreement secured by our trade accounts receivable and contract assets (the "Receivables Securitization Facility.") Under this arrangement, we transferred our trade receivables to a special purpose entity ("SPE"), which in turn pledged those receivables as collateral for borrowings under the facility. The transaction does not qualify as a sale under ASC 860, Transfers and Servicing; as a result, the arrangement is accounted for as a secured borrowing.

Previous wording

Accordingly, the receivables transferred to the SPE will remain on our consolidated balance sheet within trade accounts receivable and contract assets, and the Receivables Securitization Facility is included in "Long-term debt, net." The Receivables Securitization Facility has a limit of $150.0 million and is due July 10, 2028. As of August 31, 2025, the total amount of receivables pledged under the facility was $233.5 million, consisting of $129.3 million in trade accounts receivable and $104.1 million in contract assets, with outstanding borrowings of $150.0 million. The interest rate on the Receivables Securitization Facility is one-month SOFR plus 0.95%.

Current wording

Accordingly, the receivables transferred to the SPE will remain on our consolidated balance sheet within trade accounts receivable and contract assets, and the Receivables Securitization Facility is included in "Long-term debt, net." The Receivables Securitization Facility has a limit of $150.0 million and is due July 10, 2028. As of November 30, 2025, the total amount of receivables pledged under the facility was $249.9 million, consisting of $141.1 million in trade accounts receivable and $108.8 million in contract assets, with outstanding borrowings of $150.0 million. The interest rate on the Receivables Securitization Facility is one-month SOFR plus 0.95%.

Previous wording

The weighted average interest rate for our outstanding debt, including the Revolving Credit Facility, the Term Loan B, and Receivables Securitization Facility was 6.49% and 8.03% for the six months ended August 31, 2025 and 2024, respectively. We are also obligated to pay a leverage-based commitment fee with various tiers between 0.2% and 0.3% per year for unused amounts under the Revolving Credit Facility. As of August 31, 2025, the commitment fee rate was 0.20%.

Current wording

The weighted average interest rate for our outstanding debt, including the Revolving Credit Facility, the Term Loan B, and Receivables Securitization Facility was 6.16% and 7.77% for the nine months ended November 30, 2025 and 2024, respectively. We are also obligated to pay a leverage-based commitment fee with various tiers between 0.2% and 0.3% per year for unused amounts under the Revolving Credit Facility. As of November 30, 2025, the commitment fee rate was 0.20%.

Previous wording

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 August 31, 2025, we were in compliance with all covenants and other requirements set forth in the 2022 Credit Agreement.

Current wording

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. We are also required to maintain certain covenants under the Receivables Securitization Facility. As of November 30, 2025, we were in compliance with all covenants and other requirements set forth in the 2022 Credit Agreement and the Receivables Securitization Facility.

Previous wording

As of August 31, 2025, we had $609.9 million of debt outstanding, with varying maturities through fiscal 2030. We had approximately $361.3 million of additional credit available as of August 31, 2025.

Current wording

As of November 30, 2025, we had $574.9 million of debt outstanding, with varying maturities through fiscal 2030. We had approximately $336.4 million of additional credit available as of November 30, 2025.

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.

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. The 2022 Swap was terminated on June 30, 2025.

Previous wording

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 was terminated on June 30, 2025. Simultaneous to the termination of the 2022 Swap, we entered into a new fixed-rate interest rate swap agreement on June 30, 2025. The 2025 Swap converts the SOFR-based component of the interest rate to 3.759%. As of August 31, 2025, the 2025 Swap resulted in a total fixed rate of 5.509%. The 2025 Swap had an initial notional amount of $290.0 million and a maturity date of June 30, 2027. The objective of the 2025 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 2025 Swap as a cash flow hedge at inception. Cash settlements, in the form of cash payments or cash receipts, of the 2025 Swap are recognized in interest expense.

Current wording

Simultaneous to the termination of the 2022 Swap, we entered into a new fixed-rate interest rate swap agreement on June 30, 2025. The 2025 Swap converts the SOFR-based component of the interest rate to 3.759%. As of November 30, 2025, the 2025 Swap resulted in a total fixed rate of 5.509%. The 2025 Swap had an initial notional amount of $290.0 million and a maturity date of June 30, 2027. The objective of the 2025 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 2025 Swap as a cash flow hedge at inception. Cash settlements, in the form of cash payments or cash receipts, of the 2025 Swap are recognized in interest expense.

Previous wording

We are expanding our coatings capabilities through the construction of a new 25-acre aluminum coil coating facility in Washington, Missouri, which 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 $4.1 million was paid during the six months ended August 31, 2025. The remaining balance of $4.1 million is on schedule to occur by the third quarter of fiscal 2026, for which we have capital commitments of $4.1 million. The remaining payments in 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 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 related to the project, of which $113.6 million was paid prior to fiscal 2026 and approximately $5.9 million was paid during the nine months ended November 30, 2025. The remaining balance of $2.3 million is expected to be paid in the fourth quarter of fiscal 2026.

Previous wording

During the three months ended May 31, 2025, we received a distribution of cash from the AVAIL JV of $273.2 million, which exceeded our investment in the AVAIL JV of $107.4 million. Since we are not liable for the obligations of the AVAIL JV nor otherwise committed to provide financial support, after writing off our investment in the AVAIL JV, we recognized $165.8 million as a gain for the three months ended May 31, 2025. Due to the timing of the receipt of cash and the recognition of equity in earnings, we suspended the recognition of equity in earnings of the AVAIL JV as of May 31, 2025, until our proportionate share of earnings exceeds the excess distribution previously recognized in earnings. During the three months ended August 31, 2025, we recognized the equity in earnings from AVAIL related to our proportionate share of the gain on the sale of the Electrical Products Group. The equity in earnings was in excess of the amount we recorded in the first quarter of fiscal 2026. Therefore, we resumed the recognition of equity in earnings of the AVAIL JV for the three months ended August 31, 2025.

Current wording

During the first quarter of fiscal 2026, we received a distribution of cash from the AVAIL JV of $273.2 million, which exceeded our investment in the AVAIL JV of $107.4 million. Since we are not liable for the obligations of the AVAIL JV nor otherwise committed to provide financial support, after reducing our investment in the AVAIL JV to zero, we recognized $165.8 million as a gain during the first quarter of fiscal 2026. Due to the timing of the receipt of cash and the recognition of equity in earnings, we suspended the recognition of equity in earnings of the AVAIL JV as of May 31, 2025, until our proportionate share of earnings exceeded the excess distribution previously recognized in earnings. During the second quarter of fiscal 2026, we recognized the equity in earnings from AVAIL related to our proportionate share of the gain on the sale of the Electrical Products Group. The equity in earnings was in excess of the amount we recorded in the first quarter of fiscal 2026. Therefore, we resumed the recognition of equity in earnings of the AVAIL JV in the second quarter of fiscal 2026.

Previous wording

Following the recognition of our proportionate share of the gain on the sale of the Electrical Products Group and equity in earnings for the three months ended August 31, 2025, management identified events and circumstances indicating that the fair value of the Company's investment in the AVAIL JV may have fallen below its carrying value on an other-than-temporary basis. These indicators arose principally from the significant business divestiture by AVAIL and a corresponding reduction in AVAIL's projected future earnings. In response, management performed a recoverability analysis of our investment in the AVAIL JV. Management estimated the fair value of our 40% interest in the AVAIL JV and concluded that the decline in fair value was other-than-temporary. Accordingly, we recorded an impairment charge of $45.9 million to write down the carrying value of our investment in the AVAIL JV to $60.2 million. After recognizing the impairment loss, management believes the carrying value of the investment in the AVAIL JV is recoverable based on AVAIL's current financial position. We will continue to monitor the AVAIL JV for any indicators of impairment, and if further declines in the fair value occur and are deemed other-than-temporary, additional write-downs will be recorded. For the six months ended August 31, 2025, we recorded $232.9 million in equity in earnings, which consists of 1) $3.6 million of equity in earnings from the AVAIL

Current wording

Following the recognition of our proportionate share of the gain on the sale of the Electrical Products Group and equity in earnings during the second quarter of fiscal 2026, management identified events and circumstances indicating that the fair value of the Company's investment in the AVAIL JV may have fallen below its carrying value on an other-than-temporary basis. These indicators arose principally from the significant business divestiture by AVAIL and a corresponding reduction in AVAIL's projected future earnings. In response, management performed a recoverability analysis of our investment in the AVAIL JV. Management estimated the fair value of our 40% interest in the AVAIL JV and concluded that the decline in fair value was other-than-temporary. Accordingly, we recorded an impairment charge of $45.9 million during the second quarter of fiscal 2026 to write down the carrying value of our investment in the AVAIL JV. After recognizing the impairment loss, management believes the carrying value of the investment in the AVAIL JV is recoverable based on AVAIL's current financial position. We will continue to monitor the AVAIL JV for any indicators of impairment, and if further declines in the fair value occur and are deemed other-than-temporary, additional write-downs will be recorded. For the nine months ended November 30,

Previous wording

JV's operations for the six months ended August 31, 2025, 2) $275.2 million of a gain from the sale of the Electrical Products Group, offset by 3) an impairment loss of $45.9 million on the AVAIL JV.

Current wording

2025, we recorded $231.4 million in equity in earnings, which consists of 1) $2.8 million of equity in earnings from the AVAIL JV's operations for the nine months ended November 30, 2025, 2) $274.5 million of a net gain from the sale of the Electrical Products Group recognized during the second quarter of fiscal 2026, offset by 3) an impairment loss of $45.9 million on the AVAIL JV recognized during the second quarter of fiscal 2026.