UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, ~~2017~~2018



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-12777

AZZ Inc.

(Exact name of registrant as specified in its charter)



	TEXAS		75-0948250
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	One Museum Place, Suite 500 3100 West 7th Street Fort Worth, Texas 76107


	(Address of principal executive offices, including zip code)

(817) 810-0095

(Registrant’s telephone number, including area code)

NONE

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer		ý		Accelerated filer	¨
	Non-accelerated filer		¨
Smaller reporting company	¨
		¨		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Title of each class:		Outstanding at ~~May 2,~~November 30, 2018:
Common Stock, $1.00 par value per share		~~26,024,006~~26,087,191

AZZ INC.

INDEX



		PAGE NO.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Cash Flows	6
	Condensed Consolidated ~~Statement~~Statements of Shareholders’ Equity	7
	Notes to Condensed Consolidated Financial Statements	89
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	2322
Item 4.	Controls and Procedures.	2322

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings.	2423
Item 1A.	Risk Factors.	2423
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	2423
Item 3.	Defaults Upon Senior Securities.	2423
Item 4.	Mine Safety Disclosures.	2523
Item 5.	Other Information.	2523
Item 6.	Exhibits.	2624

	SIGNATURES	2725

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AZZ INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)


	November 30, 2017			February 28, 2017			November 30, 2018			February 28, 2018
Assets
Current assets:
Cash and cash equivalents	$	10,651		$	11,302		$	17,413		$	20,853
Accounts receivable (net of allowance for doubtful accounts of $3,300 as of November 30, 2017 and $347 as of February 28, 2017)	148,260			138,470
Accounts receivable (net of allowance for doubtful accounts of $2,348 as of November 30, 2018 and $569 as of February 28, 2018)							159,395			141,488
Inventories:
Raw material	93,883			80,169			100,594			98,475
Work-in-process	5,834			6,832			1,694			2,544
Finished goods	11,655			7,006			12,688			9,742
Costs and estimated earnings in excess of billings on uncompleted contracts	59,365			50,262
Deferred income taxes	—			249
Contract assets							70,419			51,787
Prepaid expenses and other	5,495			2,762			5,171			4,265
Total current assets	335,143			297,052			367,374			329,154
Property, plant and equipment, net	219,173			228,610			207,090			216,855
Goodwill	317,364			306,579			323,541			321,307
Intangibles and other assets, net	157,577			146,113			134,374			160,893
Total assets	$	1,029,257		$	978,354		$	1,032,379		$	1,028,209
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	45,668		$	49,816		$	45,072		$	54,162
Income tax payable	481			778			3,120			144
Accrued salaries and wages	14,982			23,429			22,606			19,011
Other accrued liabilities	22,730			24,042			23,532			19,622
Customer deposits	3,449			1,459			741			1,816
Billings in excess of costs and estimated earnings on uncompleted contracts	34,570			20,617
Contract liabilities							32,744			22,698
Debt due within one year	14,286			16,629			—			14,286
Total current liabilities	136,166			136,770			127,815			131,739
Debt due after one year, net	292,566			254,800			272,712			286,609
Other long-term liabilities	728			—			1,564			11,696
Deferred income taxes	56,021			53,648			34,410			32,962
Total liabilities	485,481			445,218			436,501			463,006
Commitments and contingencies
Shareholders’ equity:
Common stock, $1 par, shares authorized 100,000; 25,954 shares issued and outstanding at November 30, 2017 and 25,964 shares issued and outstanding at February 28, 2017	25,954			25,964
Common stock, $1 par, shares authorized 100,000; 26,087 shares issued and outstanding at November 30, 2018 and 25,959 shares issued and outstanding at February 28, 2018							26,087			25,959
Capital in excess of par value	37,138			37,739			43,944			38,446
Retained earnings	506,943			498,527			555,096			526,018
Accumulated other comprehensive loss	(26,259		)	(29,094		)	(29,249		)	(25,220		)
Total shareholders’ equity	543,776			533,136			595,878			565,203
Total liabilities and shareholders' equity	$	1,029,257		$	978,354		$	1,032,379		$	1,028,209

The accompanying notes are an integral part of the condensed consolidated financial statements.

AZZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands, except per share data)

(Unaudited)


	Three Months Ended November 30,						Nine Months Ended November 30,						Three Months Ended November 30,					Nine Months Ended November 30,
	2017			2016			2017			2016			2018		2017			2018			2017
				(Restated)						(Restated)
Net sales	$	208,158		$	228,116		$	609,770		$	679,272		$	239,516	$	208,158		$	724,539		$	609,770
Cost of sales	177,041			176,819			487,471			520,742			189,761		177,041			569,175			487,471
Gross margin	31,117			51,297			122,299			158,530			49,755		31,117			155,364			122,299

Selling, general and administrative	29,563			25,082			83,335			80,898			26,986		29,563			91,794			83,335
Operating income	1,554			26,215			38,964			77,632			22,769		1,554			63,570			38,964

Interest expense	3,507			3,654			10,267			11,159			3,723		3,507			11,541			10,267
Net loss (gain) on sale of property, plant and equipment and insurance proceeds	22			(57		)	576			26
Other income, net	(7		)	(759		)	(486		)	(949		)
Income before income taxes	(1,968		)	23,377			28,607			67,396
Income tax (benefit) expense	(1,802		)	6,731			6,925			18,402
Other (income) expense, net													309		15			(839		)	90
Income (loss) before income taxes													18,737		(1,968		)	52,868			28,607
Income tax expense (benefit)													3,342		(1,802		)	10,511			6,925
Net income (loss)	$	(166	)	$	16,646		$	21,682		$	48,994		$	15,395	$	(166	)	$	42,357		$	21,682
Earnings (loss) per common share
Basic earnings per share	$	(0.01	)	$	0.64		$	0.83		$	1.89
Diluted earnings per share	$	(0.01	)	$	0.64		$	0.83		$	1.88
Basic earnings (loss) per share													$	0.59	$	(0.01	)	$	1.63		$	0.83
Diluted earnings (loss) per share													$	0.59	$	(0.01	)	$	1.62		$	0.83

Cash dividends declared per common share	$	0.17		$	0.17		$	0.51		$	0.47		$	0.17	$	0.17		$	0.51		$	0.51

The accompanying notes are an integral part of the condensed consolidated financial statements.

AZZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


	Three Months Ended November 30,						Nine Months Ended November 30,						Three Months Ended November 30,						Nine Months Ended November 30,
	2017			2016			2017			2016			2018			2017			2018			2017
				(Restated)						(Restated)
Net income (loss)	$	(166	)	$	16,646		$	21,682		$	48,994		$	15,395		$	(166	)	$	42,357		$	21,682
Other comprehensive income (loss):
Foreign currency translation adjustments, net of income tax of $0	(1,453		)	(2,918		)	2,876			(235		)	(2,187		)	(1,453		)	(3,988		)	2,876
Interest rate swap, net of income tax of $7, $7, $22, and $22, respectively.	(13		)	(14		)	(41		)	(41		)
Interest rate swap, net of income tax of $7, $7, $22 and $22, respectively.													(14		)	(13		)	(41		)	(41		)
Other comprehensive income (loss)	(1,466		)	(2,932		)	2,835			(276		)	(2,201		)	(1,466		)	(4,029		)	2,835
Comprehensive income (loss)	$	(1,632	)	$	13,714		$	24,517		$	48,718		$	13,194		$	(1,632	)	$	38,328		$	24,517

The accompanying notes are an integral part of the condensed consolidated financial statements.

AZZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended November 30,						Nine Months Ended November 30,
	2017			2016			2018			2017
				(Restated)
Cash Flows From Operating Activities
Net income	$	21,682		$	48,994		$	42,357		$	21,682
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for doubtful accounts	2,940			18			2,039			2,940
Amortization and depreciation	37,840			37,964			38,068			37,840
Deferred income taxes	2,362			(538		)	1,533			2,362
Net loss on disposition of property, plant and equipment due to impairment	8,285			6,602
Net loss on sale of property, plant and equipment and insurance proceeds	576			26
Net loss on property, plant and equipment due to impairment							810			8,285
Net loss (gain) on sale of property, plant and equipment							(191		)	576
Amortization of deferred borrowing costs	450			952			407			450
Share-based compensation expense	4,810			4,408			3,335			4,810
Effects of changes in assets and liabilities:
Accounts receivable	(15,754		)	(33,706		)	(13,955		)	(15,754		)
Inventories	(11,744		)	(6,795		)	1,564			(11,744		)
Prepaid expenses and other	(2,518		)	(1,554		)	(953		)	(2,518		)
Other assets	(57		)	(2,451		)	(1,006		)	(57		)
Net change in billings related to costs and estimated earnings on uncompleted contracts	4,896			(3,277		)
Net change in contract assets and liabilities							(9,496		)	4,896
Accounts payable	(5,867		)	7,588			(8,037		)	(5,867		)
Other accrued liabilities and income taxes payable	(9,191		)	(956		)	3,920			(9,191		)
Net cash provided by operating activities	38,710			57,275			60,395			38,710
Cash Flows From Investing Activities
Proceeds from sale or insurance settlement of property, plant and equipment	200			543
Proceeds from sale of property, plant and equipment							362			200
Purchase of property, plant and equipment	(21,533		)	(29,135		)	(13,691		)	(21,533		)
Acquisition of subsidiaries, net of cash acquired	(32,841		)	(22,679		)	(8,000		)	(32,841		)
Net cash used in investing activities	(54,174		)	(51,271		)	(21,329		)	(54,174		)
Cash Flows From Financing Activities
Proceeds from revolving loan	273,000			150,000			212,000			273,000
Payments on revolving loan	(174,500		)	(144,000		)	(226,000		)	(174,500		)
Payments on long term debt	(63,505		)	(20,848		)	(14,286		)	(63,505		)
Purchases of treasury shares	(7,518		)	(5,282		)	—			(7,518		)
Payments of dividends	(13,266		)	(12,216		)	(13,279		)	(13,266		)
Net cash provided by (used in) financing activities	14,211			(32,346		)	(41,565		)	14,211
Effect of exchange rate changes on cash	602			(370		)	(941		)	602
Net decrease in cash and cash equivalents	(651		)	(26,712		)	(3,440		)	(651		)
Cash and cash equivalents at beginning of period	11,302			40,191			20,853			11,302
Cash and cash equivalents at end of period	$	10,651		$	13,479		$	17,413		$	10,651

Supplemental disclosures
Cash paid for interest	$	8,948		$	9,291		$	9,957		$	8,948
Cash paid for income taxes	$	8,416		$	17,768		$	2,398		$	8,416

The accompanying notes are an integral part of the condensed consolidated financial statements.

AZZ INC.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)



	Nine Months Ended November 30, 2018
				Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total
	Common Stock
	Shares	Amount
Balance at February 28, 2018	25,959	$	25,959	$	38,446		$	526,018		$	(25,220	)	$	565,203
Share-based compensation	—	—		1,358			—			—			1,358
Restricted stock units	30	30		(549		)	—			—			(519		)
Stock issued for SARs	1	1		—			—			—			1
Employee stock purchase plan	37	37		1,290			—			—			1,327
Cash dividends paid	—	—		—			(4,418		)	—			(4,418		)
Net income	—	—		—			15,718			—			15,718
Foreign currency translation	—	—		—			—			(2,256		)	(2,256		)
Interest rate swap	—	—		—			—			(14		)	(14		)
Balance at May 31, 2018	26,027	$	26,027	$	40,545		$	537,318		$	(27,490	)	$	576,400
Share-based compensation	15	15		2,286			—			—			2,301
Restricted stock units	—	—		(14		)	—			—			(14		)
Stock issued for SARs	8	8		(30		)	—			—			(22		)
Cash dividends paid	—	—		—			(4,426		)	—			(4,426		)
Net income	—	—		—			11,244			—			11,244
Foreign currency translation	—	—		—			—			455			455
Interest rate swap	—	—		—			—			(13		)	(13		)
Balance at August 31, 2018	26,050	$	26,050	$	42,787		$	544,136		$	(27,048	)	$	585,925
Share-based compensation	—	—		(324		)	—			—			(324		)
Employee stock purchase plan	37	37		1,481			—			—			1,518
Cash dividends paid	—	—		—			(4,435		)	—			(4,435		)
Net income	—	—		—			15,395			—			15,395
Foreign currency translation	—	—		—			—			(2,187		)	(2,187		)
Interest rate swap	—	—		—			—			(14		)	(14		)
Balance at November 30, 2018	26,087	$	26,087	$	43,944		$	555,096		$	(29,249	)	$	595,878

The accompanying notes are an integral part of the condensed consolidated financial statements.

AZZ INC.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)


																		Nine Months Ended November 30, 2017
						Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total								Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total
	Common Stock																	Common Stock
	Shares		Amount															Shares		Amount
Balance at February 28, 2017	25,964		$	25,964		$	37,739		$	498,527		$	(29,094	)	$	533,136		25,964		$	25,964		$	37,739		$	498,527		$	(29,094	)	$	533,136
Stock compensation	16		16			4,794			—			—			4,810
Share-based compensation																		—		—			1,194			—			—			1,194
Restricted stock units																		42		42			(1,240		)	—			—			(1,198		)
Employee stock purchase plan																		35		35			1,597			—			—			1,632
Retirement of treasury shares																		(47	)	(47		)	(2,636		)	—			—			(2,683		)
Cash dividends paid																		—		—			—			(4,423		)	—			(4,423		)
Net income																		—		—			—			12,062			—			12,062
Foreign currency translation																		—		—			—			—			(997		)	(997		)
Interest rate swap																		—		—			—			—			(14		)	(14		)
Balance at May 31, 2017																		25,994		$	25,994		$	36,654		$	506,166		$	(30,105	)	$	538,709
Share-based compensation																		16		16			2,190			—			—			2,206
Stock issued for SARs																		1		1			(1		)	—			—			—
Retirement of treasury shares																		(50	)	(50		)	(2,452		)	—			—			(2,502		)
Cash dividends paid																		—		—			—			(4,422		)	—			(4,422		)
Net income																		—		—			—			9,786			—			9,786
Foreign currency translation																		—		—			—			—			5,325			5,325
Interest rate swap																		—		—			—			—			(13		)	(13		)
Balance at August 31, 2017																		25,961		$	25,961		$	36,391		$	511,530		$	(24,793	)	$	549,089
Share-based compensation																		—		—			1,410			—			—			1,410
Restricted stock units	43		43			(1,259		)	—			—			(1,216		)	1		1			(19		)	—			—			(18		)
Stock issued for SARs	1		1			(5		)	—			—			(4		)	—		—			(4		)	—			—			(4		)
Employee stock purchase plan	77		77			3,240			—			—			3,317			42		42			1,643			—			—			1,685
Retirement of treasury shares	(147	)	(147		)	(7,371		)	—			—			(7,518		)	(50	)	(50		)	(2,283		)	—			—			(2,333		)
Cash dividends paid	—		—			—			(13,266		)	—			(13,266		)	—		—			—			(4,421		)	—			(4,421		)
Net income	—		—			—			21,682			—			21,682
Foreign currency translation, net of $0 income tax	—		—			—			—			2,876			2,876
Interest rate swap, net of $22 income tax	—		—			—			—			(41		)	(41		)
Net loss																		—		—			—			(166		)	—			(166		)
Foreign currency translation																		—		—			—			—			(1,453		)	(1,453		)
Interest rate swap																		—		—			—			—			(13		)	(13		)
Balance at November 30, 2017	25,954		$	25,954		$	37,138		$	506,943		$	(26,259	)	$	543,776		25,954		$	25,954		$	37,138		$	506,943		$	(26,259	)	$	543,776

The accompanying notes are an integral part of the condensed consolidated financial statements.

AZZ INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


1.	The Company and Basis of Presentation

AZZ Inc. (“AZZ”, the “Company”, "our" or “we”) was established in 1956 and incorporated under the laws of the ~~State~~state of Texas. ~~We are~~The Company is a global provider of ~~galvanizing~~metal coating services, welding solutions, specialty electrical equipment and highly engineered services to the power generation, transmission, distribution, refining and industrial markets. ~~We have~~The Company has two distinct operating segments: the Energy ~~Segment~~segment and the Metal Coatings ~~Segment.~~segment. AZZ Energy is 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 the energy markets worldwide. AZZ Metal Coatings is a leading provider of metal finishing solutions for corrosion protection, including hot dip galvanizing to the North American steel fabrication industry.

As of March 1, 2017, our Galvanizing Segment was rebranded to the Metal Coatings Segment to more closely align the description of the segment with its current offerings and served markets. There have been no changes to the underlying information reported under this operating segment for prior periods, however, the new description will be included in the operating results for future filings and include the new powder coating offerings for the current and future periods.

Presentation

The accompanying condensed consolidated balance sheet as of February 28, ~~2017,~~2018, which was derived from audited financial statements, and the unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. These financial statements should be read in conjunction with the audited financial statements and related notes for the fiscal year ended February 28, ~~2017,~~2018, included in the Company’s Annual Report on Form ~~10-K/A~~10-K covering such period.

Our fiscal year ends on the last day of February and is identified as the fiscal year for the calendar year in which it ends. For example, the fiscal year ended February 28, ~~2018~~2019 is referred to as fiscal ~~2018.~~2019.

In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, which are necessary to present fairly the financial position of the Company as of November 30, ~~2017~~,2018, the results of its operations for the three and nine months ended November 30, ~~2017~~2018 and ~~2016,~~2017, and cash flows for the nine months ended November 30, ~~2017~~2018 and ~~2016.~~2017. These interim results are not necessarily indicative of results for a full year.

Accounting Standards Recently Adopted

~~In November 2015,~~On March 1, 2018, the ~~Financial Accounting Standards Board ("FASB") issued~~Company adopted Accounting Standards Update ("ASU") ~~2015-17,~~No. 2014-09, ~~Income Taxes~~Revenue from Contracts with Customers (Topic ~~740): Balance Sheet Classification~~606) and the related amendments ("ASC 606") using the modified retrospective method applied to those contracts which were not completed as of ~~Deferred Taxes. ASU 2015-17 simplifies~~February 28, 2018. Results for operating periods beginning on or after March 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the ~~presentation~~accounting standards in effect for those periods. However, for the three and nine months ended November 30, 2018, the impact of ~~deferred taxes~~applying ASC 606 as opposed to applying legacy accounting guidance did not result in a ~~classified statement~~significant change to reported revenues or costs of ~~financial position~~revenues. Accordingly, no reconciliation has been provided to show the difference between applying ASC 606 and legacy guidance for the three and nine months ended November 30, 2018. In addition, there was ~~adopted by~~no cumulative effect adjustment to the ~~Company~~beginning retained earnings on March 1, ~~2017. As~~2018 related to the adoption. See Note 2 for a ~~result~~description of the Company's accounting policy resulting from the adoption of ASC 606.

On March 1, 2018, the Company is required to offset deferred tax liabilities and assets, as well as any related valuation allowance, and present as a single non-current amount. However, the Company shall not offset deferred tax liabilities and assets attributable to different tax-paying components of the entity or to different tax jurisdictions. The adoption was on a prospective basis and therefore had no impact on the prior year.

~~Recently Issued Accounting Pronouncements~~

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles-Goodwill and Other Topics (Topic 350)-Simplifying the Test for Goodwill Impairment.~~ This guidance simplifies the measurement of goodwill by eliminating the Step 2 impairment test. The new guidance requires companies to perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The amendment is required to be adopted prospectively. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company elected to adopt the guidance early effective for its annual goodwill impairment test performed in the fourth quarter of fiscal year 2018 and the adoption did not have a material impact on its consolidated financial statements.

~~In August 2016, the FASB issued~~ ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. The ~~Company will adopt the new standard effective in the first quarter of fiscal year 2019 and the~~ adoption isdid not ~~expected to~~ have a material impact on ~~its~~the Company's consolidated statements of cash flows.

Recently Issued Accounting Pronouncements

In February 2016, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (Topic 842). Under the new guidance, a lessee will be required to recognize assets and liabilities for all leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. ~~This ASU~~

The Company expects to early adopt this standard in the fourth quarter of fiscal year 2019, which will be ~~effective for~~retrospectively applied to the ~~Company~~beginning of fiscal year 2019. The standard, as subsequently amended, does not require full retrospective adoption,

thus periods prior to fiscal year 2019 will not be adjusted and any impacts of transitioning to the new standard will be reflected with a cumulative effect adjustment to the opening balance of retained earnings in the ~~first quarter~~year of its fiscal year 2020 and early adoption is permitted. The ASU requires adoption based upon a modified retrospective transition approach. The Company has not yet selected a transition method, has not yet determined whether it will elect early adoption and is currently evaluating the impact ofadoption.

In preparing for the adoption of this standard, onthe Company is substantially complete in assessing its portfolio of leases for accounting and disclosure purposes. The Company is also progressing with the design of the future lease accounting procedures, policies and related internal controls and with the implementation of lease accounting software. While the Company has not yet completed its evaluation of the financial statement impact of the new lease accounting standard, the Company expects that the adoption will result in a significant increase in assets and liabilities related to operating leases in its consolidated ~~financial statements and~~balance sheets. However, the Company does not expect to record a significant cumulative effect adjustment as a result of adopting the standard.


2.	Summary of Significant Accounting Policies

The Company’s significant accounting policies are detailed in Note 1 of its Annual Report on Form 10-K for the year ended February 28, 2018. The following section includes revised accounting policies related ~~disclosures.~~to the adoption of ASC 606.

Revenue recognition

The Company determines revenue recognition through the following steps:

1)Identification of the contract with a customer,

~~In May 2014,~~2)Identification of the ~~FASB issued ASU 2014-09,~~ performance obligations in the contract,

3)Determination of the transaction price,

4)Allocation of the transaction price to performance obligations in the contract, and

5)Recognition of revenue when, or as, the Company satisfies a performance obligation

Revenue ~~from Contracts with Customers: Topic 606~~ ~~("ASU 2014-09") which supersedes~~is recognized when control of the ~~revenue recognition requirements in ASC 605,~~ ~~Revenue Recognition. The core principle of ASU 2014-09 is to recognize revenue when~~ promised goods or services ~~are~~is transferred to the Company’s customers, in an amount that reflects the consideration that ~~is expected~~it expects to be ~~received~~entitled to in exchange for those goods or services.The ~~standard will be effective for the Company beginning in fiscal 2019~~amount and ~~provides the option to adopt the guidance on a full retrospective basis or a modified retrospective basis.~~

The Company has substantially completed its assessment of the impacts that the standard will have on its financial statements, and determined that the adoption is not expected to have a significant impact on its results of operations, cash flows, or financial position. Based on the Company’s evaluation process completed and review of its contracts with customers, the timing and amount of revenue recognized under the new standard is generally consistent with its revenue recognition policy under previous guidance. For its Metal Coatings segment, the Company will recognize revenue over time as the metal coating is applied to the customer owned material while revenue was recognized at the completion of the service under the prior guidance. However, the change is not expected to significantly impact the timing of revenue recognition ~~except for uncompleted jobs at~~varies by segment based on the ~~end~~nature of ~~each quarter. For its~~the goods or services provided and the terms and conditions of the customer contract.

Energy Segment

AZZ's Energy segment is a provider of specialized products and services designed to support industrial, nuclear and electrical applications. Within this segment, the ~~Company will recognize revenues for~~contract is governed by a customer purchase order and an executed product or services agreement. The contract generally specifies the delivery of what constitutes a single performance obligation consisting of either custom built products, custom services, or off-the-shelf products. When the Company does enter into an arrangement with multiple performance obligations, the transaction price is allocated to each performance obligation based on the relative standalone selling prices of the goods or services being provided to the customer and revenue is recognized upon the satisfaction of each performance obligation. The Company combines contracts for revenue recognition purposes that are executed with the same customer within a short timeframe from each other and that purport to be for a single commercial objective.

For custom built products, the Company recognizes revenues over time ifprovided that the goods do not have an alternative use to the Company and the Company has an unconditional right to payment for work completed to date plus ~~the applicable~~a reasonable margin. ~~This is generally consistent with the revenue recognition pattern under the prior guidance, however~~For custom services, which consist of specialized welding and other professional services, the Company continues to monitor its contracts to ensure that it has an unconditional right to payment and, in the circumstances when it does not, per the guidance, it will recognize revenues at a point-in-time upon transfer of the good to the customer. For bespoke services within its Energy segment, the Company will continue to recognizerecognizes revenues over time as the services are rendered due to the fact that the services enhance a customer owned asset. For off-the-shelf products, which consist of tubing and ~~for off-the-shelf~~lighting products, the Company ~~will continue to recognize~~recognizes revenue at a point-in-time upon the transfer of the goods to the customer.

For services and custom built products, the Company recognizes revenues over time using a cost-to-cost input measure. This requires the Company to estimate the total contract revenues, costs and margin, which can involve significant management judgment. As a significant change in one or more of these estimates could affect the profitability of the Company’s contracts, management reviews and updates its contract related estimates regularly. The Company ~~will adopt~~recognizes adjustments in estimated margin on contracts under a cumulative catch-up basis and subsequent revenues are recognized using the ~~new standard effective~~adjusted estimate. If the estimate of contract margin indicates an anticipated loss on the contract, the Company recognizes the total estimated loss in the ~~first quarter~~period it is identified.

Due to the custom nature of ~~fiscal year 2019, using~~ the goods and services provided, contracts within the Energy segment are often modified ~~retrospective approach,~~to account for changes in contract specifications and ~~will expand its consolidated financial statement disclosures~~requirements. A contract modification exists when the modification either creates new, or changes the existing, enforceable rights and obligations in ~~order~~the contract. For the Company, most contract modifications are related to ~~comply with~~goods or services that are not distinct from those in the ~~new standard.~~

original contract due to the significant interrelationship or interdependencies between the deliverables. Such modifications are accounted for as if they were part of the original contract. As


2.	~~Restatement of Previously Issued Financial Statements~~

~~As previously disclosed,~~a result, the ~~Company determined that~~transaction price and the measure of progress for ~~certain~~the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis.

In addition to fixed consideration, the Company’s contracts within its Energy ~~Segment~~segment can include variable consideration, including claims, incentive fees, liquidated damages or other penalties. The Company recognizes revenue for ~~which~~variable consideration when it is probable that a significant reversal in the amount of cumulative revenue ~~was historically~~ recognized ~~upon~~will not occur. The Company estimates the amount of revenue to be recognized on variable consideration using the expected value or the most likely amount method, whichever is expected to better predict the amount.

Metal Coatings Segment

AZZ’s Metal Coatings segment is a provider of hot dip galvanizing, powder coating and other metal coating applications to the steel fabrication industry. Within this segment, the contract ~~completion~~is governed by a customer purchase order or work order. The contract generally specifies the delivery of what constitutes a single performance obligation consisting of metal coating services. The Company combines contracts for revenue recognition purposes that are executed with the same customer within a short timeframe from each other and ~~transfer~~that purport to be for a single commercial objective.

The Company recognizes revenue over time as the metal coating is applied to the customer provided material as the process enhances a customer controlled asset. Contract modifications are rare within this segment and most contracts are on a fixed price basis with no variable consideration.

Contract Assets and Liabilities

The timing of ~~title,~~revenue recognition, billings and cash collections results in accounts receivable, contract assets (unbilled receivables), and contract liabilities (customer advances and deposits) on the ~~Company instead should have applied~~consolidated balance sheet, primarily related to the ~~percentage-of-completion method~~Company’s Energy segment. Amounts are billed as work progresses in accordance with ~~the FASB’s Accounting Standards Codification No. 605-35,~~ ~~Construction-Type and Production-Type Contracts. In general, the percentage-of-completion method results in a~~agreed upon contractual terms, either at periodic intervals (e.g., weekly or monthly) or upon achievement of contractual milestones. Billing can occur subsequent to revenue recognition, ~~pattern~~resulting in contract assets. In addition, the Company can receive advances or deposits from its customers, before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period.

For the nine months ended November 30, 2018, the Company recognized $20.1 million of revenues from amounts that were included in contract liabilities at February 28, 2018. The Company did not record any revenues for the three or nine months ended November 30, 2018 related to performance obligations satisfied in prior periods. The Company expects to recognize revenues of approximately $13.8 million, $16.1 million, $1.5 million and $1.3 million in fiscal 2019, 2020, 2021 and 2022, respectively, related to the $32.7 million balance of contract liabilities as of November 30, 2018.

The increases or decreases in accounts receivable, contract assets and contract liabilities during the three and nine months ended November 30, 2018 were due primarily to normal timing differences between the Company’s performance and customer payments. The Lectrus acquisition described in Note 8 had no impact on contract assets or liabilities as of the date of acquisition.

Other

No general rights of return exist for customers and the Company establishes provisions for estimated warranties. The Company generally does not sell extended warranties. Revenue is recognized net of applicable sales and other taxes. The Company does not adjust the contract price for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the Company transfers a good or service to a customer and when the customer pays for that good or service will be one year or less, which is generally the case. Sales commissions are deferred and recognized over ~~time~~the same period as the related revenues. Shipping and handling is treated as a ~~project progresses~~fulfillment obligation instead of a separate performance obligation and such costs are expensed as ~~opposed to deferring revenues until contract completion.~~

The Company concluded that the impact of applying the percentage-of-completion method to its revenue contracts was materially different from its previously reported results under its historical practice. As a result, the Company is restating its condensed consolidated financial statements for the periods impacted. The following financial tables reconcile the previously reported amounts to the restated amounts for each condensed consolidated financial statement.incurred.

~~The~~Disaggregated Revenue

Revenue by segment and geography is disclosed in Note 5. In addition, the following table ~~below sets forth the condensed consolidated statements of income, including the balances originally reported, corrections and the as restated balances for each restated period (in thousands):~~

Three Months Ended November 30, Nine Months Ended November 30,
2016 2016

As
Reported
Correction
As
Restated

As
Reported
Correction
As
Restated
Net Sales $ 227,459
$ 657
$ 228,116
$ 665,171
$ 14,101
$ 679,272
Cost of Sales 173,593
3,226
176,819
506,091
14,651
520,742
Gross Profit 53,866
(2,569 ) 51,297
159,080
(550 ) 158,530

Operating Income 28,784
(2,569 ) 26,215
78,182
(550 ) 77,632

Income Before Income Taxes 25,946
(2,569 ) 23,377
67,946
(550 ) 67,396
Income Tax Expense 7,695
(964 ) 6,731
18,609
(207 ) 18,402
Net Income $ 18,251
$ (1,605 ) $ 16,646
$ 49,337
$ (343 ) $ 48,994
Earnings Per Common Share
Basic Earnings Per Share $ 0.70
$ (0.06 ) $ 0.64
$ 1.90
$ (0.01 ) $ 1.89
Diluted Earnings Per Share $ 0.70
$ (0.06 ) $ 0.64
$ 1.89
$ (0.01 ) $ 1.88

~~The table below sets forth the condensed consolidated statements of comprehensive income, including the balances originally reported, corrections and the as restated balances for each restated period~~presents disaggregated revenue by customer industry (in thousands):

Three Months Ended November 30, Nine Months Ended November 30,
2016 2016

As
Reported
Correction
As
Restated

As
Reported
Correction
As
Restated
Net Income $ 18,251
$ (1,605 ) $ 16,646
$ 49,337
$ (343 ) $ 48,994
Comprehensive Income 15,319
(1,605 ) 13,714
49,061
(343 ) 48,718



	Three Months Ended November 30,				Nine Months Ended November 30,
	2018		2017		2018		2017
Net sales:
Industrial - oil and gas, construction, and general	$	143,710	$	126,976	$	415,323	$	355,895
Transmission and distribution	35,927		45,795		162,033		130,134
Power generation	59,879		35,387		147,183		123,741
Total net sales	$	239,516	$	208,158	$	724,539	$	609,770

The table below sets forth the condensed consolidated statements of cash flows from operating activities, including the balances originally reported, corrections and the as restated balances for each restated period (in thousands):

Nine Months Ended November 30,
2016

As
Reported
Correction
As
Restated
Cash flows from operating activities:
Net income $ 49,337
$ (343 ) $ 48,994
Deferred income taxes (331 ) (207 ) (538 )
Inventories (20,760 ) 13,965
(6,795 )
Net change in billings related to costs and estimated earnings on uncompleted contracts 8,853
(12,130 ) (3,277 )
Other accrued liabilities and income taxes payable 329
(1,285 ) (956 )
Net cash provided by operating activities: $ 57,275
$ —
$ 57,275

~~In addition to the restated condensed consolidated financial statements, the information contained in Notes 3 and 5 has been restated.~~


3.	Earnings (Loss) Per Share

Earnings (loss) per share is based on the weighted average number of shares outstanding during each period, adjusted for the dilutive effect of stock awards.

The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, expect per share data):


	Three Months Ended November 30,					Nine Months Ended November 30,
	2017			2016		2017		2016		Three Months Ended November 30,					Nine Months Ended November 30,
				(Restated)				(Restated)		2018		2017			2018		2017
Numerator:
Net income (loss) for basic and diluted earnings per common share	$	(166	)	$	16,646	$	21,682	$	48,994	$	15,395	$	(166	)	$	42,357	$	21,682
Denominator:
Denominator for basic earnings per common share–weighted average shares	25,965			26,005		25,982		25,974		26,064		25,965			26,022		25,982
Effect of dilutive securities:
Employee and director stock awards	—			128		67		130		87		—			70		67
Denominator for diluted earnings per common share	25,965			26,133		26,049		26,104		26,151		25,965			26,092		26,049
Earnings (loss) per share basic and diluted:
Basic earnings (loss) per common share	$	(0.01	)	$	0.64	$	0.83	$	1.89	$	0.59	$	(0.01	)	$	1.63	$	0.83
Diluted earnings (loss) per common share	$	(0.01	)	$	0.64	$	0.83	$	1.88	$	0.59	$	(0.01	)	$	1.62	$	0.83

For the three months ended November 30, 2017, approximately 0.1 million shares related to employee and director stock awards were excluded from the diluted shares outstanding count as the effect was anti-dilutive.


4.	Share-based Compensation

The Company has one share-based compensation plan, the 2014 Long Term Incentive Plan (the “Plan”). The purpose of the Plan is to promote the growth and prosperity of the Company by permitting the Company to grant to its employees, directors and advisors various types of restricted stock unit awards, performance share units, stock options, and stock appreciation rights to purchase common stock of the Company. The maximum number of shares that may be issued under the Plan is 1,500,000 shares. As of November 30, ~~2017,~~2018, the Company ~~has~~had approximately ~~1,304,407~~1,248,775 shares available for future issuance under the Plan.

Restricted Stock Unit Awards

Restricted stock unit awards are valued at the market price of our common stock on the grant date. Awards ~~issued prior to fiscal 2015 generally have a three year cliff vesting schedule and awards issued subsequent to fiscal 2015~~ generally vest ratably over a period of three years but these awards may vest ~~early~~earlier in accordance with the Plan’s accelerated vesting provisions.

~~The activity~~A summary of ~~our~~the Company’s non-vested restricted stock unit ~~awards~~award activity for the nine month period endedNovember 30, ~~2017~~2018 is as follows:


	Restricted Stock Units		Weighted Average Grant Date Fair Value		Restricted Stock Units		Weighted Average Grant Date Fair Value
Non-vested balance as of February 28, 2017	134,547		$	51.10
Non-vested balance as of February 28, 2018					109,777		$	56.62
Granted	46,436		60.01		84,023		42.01
Vested	(62,576	)	47.26		(37,670	)	54.63
Forfeited	(8,630	)	56.64		(7,290	)	55.27
Non-vested balance as of November 30, 2017	109,777		$	56.62
Non-vested balance as of November 30, 2018					148,840		$	48.94

Performance Share Unit Awards

~~Performance~~The Company also grants performance share ~~unit~~units ("PSU") awards ~~are valued at the market price of our common stock on the grant date.~~to certain employees. These PSU awards have a three year performance cycle and will vest and become payable, if at all, on the third anniversary of the award date. The PSU awards are subject to the Company’s degree of achievement of a target annual average adjusted return on assets during these ~~three year periods.~~three-year periods and, in certain circumstances, vesting is based on the relative performance of a predetermined group of peer companies. In addition, ~~a multiplier~~these PSU awards may ~~be applied to the total awards granted~~have vesting conditions or certain vesting multipliers, which isare based on the Company’s total shareholder return during such ~~three year~~three-year period in comparison to a defined specific industry peer ~~group as set forth in~~group. The Company estimates the ~~plan.~~fair value of PSU awards with performance and service conditions using the value of the Company's common stock on the date of grant. The ~~activity~~Company estimates the fair value of ~~our~~PSU awards with market conditions using a Monte Carlo simulation model on the date of grant.

A summary of the Company’ non-vested performance share unit ~~awards~~award activity for the nine month period ended November 30, ~~2017~~2018 is as follows:


	Performance Stock Units		Weighted Average Grant Date Fair Value		Performance Stock Units		Weighted Average Grant Date Fair Value
Non-vested balance as of February 28, 2017	51,426		$	51.70
Non-vested balance as of February 28, 2018					70,030		$	54.59
Granted	26,157		60.20		46,183		42.00
Vested	—		—		(3,378	)	46.65
Forfeited	(7,553	)	54.31		(29,710	)	49.51
Non-vested balance as of November 30, 2017	70,030		$	54.59
Non-vested balance as of November 30, 2018					83,125		$	49.74

Stock Appreciation Rights

Stock appreciation rights are granted with an exercise price equal to the market value of our common stock on the date of grant. These awards generally have a contractual term of 7 years and vest ratably over a period of three years although some may vest immediately on issuance. These awards are valued using the Black-Scholes ~~option pricing~~option-pricing model.

A summary of the Company’s stock appreciation rights activity for the nine month period endedNovember 30, ~~2017~~2018 is as follows:


	SARs		Weighted Average Exercise Price		SARs		Weighted Average Exercise Price
Outstanding as of February 28, 2017	170,139		$	42.02
Outstanding as of February 28, 2018					148,513		$	43.29
Granted	—		—		—		—
Exercised	(8,350	)	43.31		(47,484	)	40.84
Forfeited	(2,145	)	45.36		(2,845	)	43.92
Outstanding as of November 30, 2017	159,644		$	41.91
Exercisable as of November 30, 2017	159,644		$	41.91
Outstanding as of November 30, 2018					98,184		$	44.46
Exercisable as of November 30, 2018					98,184		$	44.46

The average remaining contractual term for those stock appreciation rights outstanding at and those stock appreciation rights that were exercisable as of November 30, ~~2017~~ ~~is 2.77~~2018 was 2.09 years, with an aggregate intrinsic value of ~~$1.0~~$0.3 million. ~~The average remaining contractual terms for those stock appreciation rights that are exercisable as of November 30, 2017 is 2.77 years, with an aggregate intrinsic value of $1.0 million.~~

Employee Stock Purchase Plan

The Company also has an ~~employee stock purchase plan,~~Employee Stock Purchase Plan, which allows employees of the Company to purchase common stock of the Company through accumulated payroll deductions. Offerings under this plan have a duration of 24 months (the "offering period"). On the first day of an offering period (the “enrollment date”) the participant is granted the option to purchase shares on each exercise date at the lower of 85% of the market value of a share of our common stock on the enrollment date or the exercise date. The participant’s right to purchase common stock under the plan is restricted to no more than ~~$25,000~~$25,000 per calendar year and the participant may not purchase more than 5,000 shares during any offering period. Participants may terminate their interest in a given offering or a given exercise period by withdrawing all of their accumulated payroll deductions at any time prior to the end of the offering period. The fair value of the estimated number of shares to be issued under each offering is determined using the Black-Scholes ~~option pricing~~option-pricing model. For the nine month period endedNovember 30, ~~2017~~,2018, the Company issued ~~76,898~~73,702 shares under the Company's Employee Stock Purchase Plan.

Share-based Compensation Expense

Share-based compensation expense and related income tax benefits related to all the plans listed above were as follows (in thousands):


	Nine Months Ended November 30,				Nine Months Ended November 30,
	2017		2016		2018		2017
Compensation expense	$	4,810	$	4,408	$	3,335	$	4,810
Income tax benefits	$	1,684	$	1,411	$	700	$	1,684

Unrecognized compensation cost related to restricted stock units, performance share unit awards, stock appreciation rights, and the ~~employee stock purchase plan~~Company's Employee Stock Purchase Plan at November 30, ~~2017~~2018 totals ~~$7.5~~$8.0 million.

The Company’s policy is to issue shares required under these plans from the Company’s ~~treasury shares or from the Company’s~~ authorized but unissued shares.


5.	Segments

Segment Information

Net sales and operating income by segment for each period were as follows (in thousands):


	Three Months Ended November 30,						Nine Months Ended November 30,						Three Months Ended November 30,						Nine Months Ended November 30,
	2017			2016			2017			2016			2018			2017			2018			2017
				(Restated)						(Restated)
Net Sales:
Net sales:
Energy	$	107,021		$	136,210		$	317,526		$	385,357		$	132,025		$	107,021		$	385,526		$	317,526
Metal Coatings	101,137			91,906			292,244			293,915			107,491			101,137			339,013			292,244
Total net sales	208,158			228,116			609,770			679,272			$	239,516		$	208,158		$	724,539		$	609,770

Operating Income (loss):
Operating income (loss):
Energy	$	(12,103	)	$	12,865		$	(3,029	)	$	41,833		$	11,532		$	(12,103	)	$	25,763		$	(3,029	)
Metal Coatings	21,681			21,345			66,332			60,679			18,321			21,681			65,581			66,332
Corporate	(8,024		)	(7,995		)	(24,339		)	(24,880		)	(7,084		)	(8,024		)	(27,774		)	(24,339		)
Total operating income	$	1,554		$	26,215		$	38,964		$	77,632		$	22,769		$	1,554		$	63,570		$	38,964

Asset balances by segment for each period were as follows (in thousands):


	November 30, 2017		February 28, 2017		November 30, 2018		February 28, 2018
Total assets:
Energy	$	568,607	$	536,557	$	585,807	$	554,866
Metal Coatings	447,749		428,330		436,873		460,575
Corporate	12,901		13,467		9,699		12,768
Total	$	1,029,257	$	978,354	$	1,032,379	$	1,028,209

~~For~~In the ~~three and nine months ended November 30, 2017,~~second quarter of fiscal 2019, the Company recognized impairment charges of ~~$8.3~~$0.8 million, which were classified within ~~costs~~cost of sales onin the consolidated statement of income and were related to property, plant and equipment in the ~~Energy~~Metal Coatings segment that was ~~retired prior to~~vacated or abandoned upon the ~~end~~consolidation of ~~its useful life.~~

two galvanizing facilities in the Gulf Coast region of the United States. As part of the consolidation of facilities, the Company also recognized $0.5 million in employee severance and other disposal costs in the second quarter of fiscal 2019, which were also classified within cost of sales in the consolidated statement of income.

Financial Information About Geographical Areas

The following table presents ~~revenue~~revenues by geographic region for each period (in thousands):


	Three Months Ended November 30,					Nine Months Ended November 30,
	2017			2016		2017			2016			Three Months Ended November 30,				Nine Months Ended November 30,
				(Restated)					(Restated)			2018		2017		2018		2017
Net sales:
United States	$	176,631		$	192,183	$	505,955		$	551,185		$	203,788	$	175,803	$	605,672	$	505,023
International	32,355			35,933		104,747			128,243			35,728		32,355		118,867		104,747
Eliminations	(828		)	—		(932		)	(156		)
Total	$	208,158		$	228,116	$	609,770		$	679,272		$	239,516	$	208,158	$	724,539	$	609,770

The following table presents fixed assets by geographic region for each period (in thousands):


	November 30, 2017		February 28, 2017		November 30, 2018		February 28, 2018
Property, plant and equipment, net:
United States	$	195,931	$	205,079	$	186,696	$	194,418
Canada	17,668		18,002		16,619		18,254
Other countries	5,574		5,529		3,775		4,183
Total	$	219,173	$	228,610	$	207,090	$	216,855


6.	Warranty Reserves

A reserve has been established to provide for the estimated future cost of warranties on a portion of the Company’s delivered products and is classified within other accrued liabilities on the consolidated balance ~~sheet.~~sheets. Management periodically reviews the reserves and makes adjustments accordingly. Warranties cover such factors as non-conformance to specifications and defects in material and workmanship.

The following table shows the changes in the warranty reserves ~~since~~for the ~~end of fiscal 2017~~nine month period ended November 30, 2018 (in thousands):


	Warranty Reserve			Warranty Reserve
Balance at February 28, 2017	$	2,098
Balance at February 28, 2018				$	2,013
Warranty costs incurred	(1,424		)	(1,674		)
Additions charged to income	1,167			1,561
Balance at November 30, 2017	$	1,841
Balance at November 30, 2018				$	1,900


7.	Debt

The Company's debt consisted of the following for each of the periods presented (in thousands):

November 30, 2017 February 28, 2017
Senior Notes, due in balloon payment in January 2021 $ 125,000
$ 125,000
Senior Notes, due in annual installments of $14,286 beginning in March 2012 through March 2018 14,286
28,571
Term Note, due in quarterly installments beginning in June 2013 through March 2018 —
49,219
Revolving line of credit with bank 168,000
69,500
Total debt 307,286
272,290
Unamortized debt issuance costs for Senior Notes and Term Note (434 ) (861 )
Total debt, net 306,852
271,429
Less amount due within one year (14,286 ) (16,629 )
Debt due after one year, net $ 292,566
$ 254,800



	November 30, 2018			February 28, 2018
2011 Senior Notes	$	125,000		$	125,000
2008 Senior Notes	—			14,286
2017 Revolving Credit Facility	148,000			162,000
Total debt	273,000			301,286
Unamortized debt issuance costs for Senior Notes	(288		)	(391		)
Total debt, net	272,712			300,895
Less amount due within one year	—			(14,286		)
Debt due after one year, net	$	272,712		$	286,609

On March 21, 2017, we executed the Amended and Restated Credit Agreement (the “2017 Credit Agreement”) with Bank of America and other lenders. The 2017 Credit Agreement amended the Credit Agreement entered into on March 27, 2013 by the following: (i) extending the maturity date until March 21, 2022, (ii) providing for a senior revolving credit facility in a principal amount of up to $450 million, with an additional $150 million accordion, (iii) including a $75 million sublimit for the issuance of standby and commercial letters of credit, (iv) including a $30 million sublimit for swing line loans, (v) restricting indebtedness incurred in respect of capital leases, synthetic lease obligations and purchase money obligations not to exceed $20 million, (vi) restricting investments in any foreign subsidiaries not to exceed $50 million in the aggregate, and (vii) including various financial covenants and certain restricted payments relating to dividends and share repurchases as specifically set forth in the 2017 Credit Agreement. The balance due on the $75.0 million term facility under the previous Credit Agreement was paid in full as a result of the execution of the 2017 Credit Agreement. The financial covenants, as defined in the 2017 Credit Agreement, require us to maintain on a consolidated basis a Leverage Ratio not to exceed 3.25:1.0 and an Interest Coverage Ratio of at least 3.00:1.0. The 2017 Credit Agreement will be used to finance working capital needs, capital improvements, dividends, future acquisitions, letter of credit needs and share repurchases.

Interest rates for borrowings under the 2017 Credit Agreement are based on either a Eurodollar Rate or a Base Rate plus a margin ranging from 0.875% to 1.875% depending on our Leverage Ratio (as defined in the 2017 Credit Agreement). The Eurodollar Rate is defined as LIBOR for a term equivalent to the borrowing term (or other similar interbank rates if LIBOR is unavailable). The Base Rate is defined as the highest of the applicable Fed Funds rate plus 0.50%, the Prime rate, or the Eurodollar Rate plus 1.0% at the time of borrowing. The 2017 Credit Agreement also carries a Commitment Fee for the unfunded portion ranging from 0.175% to 0.30% per annum, depending on our Leverage Ratio.


8.	~~Acquisitions~~

On September 6, 2017, we completed the acquisition of all the assets and outstanding shares of Powergrid Solutions, Inc. ("PSI"), a privately held company, based in Oshkosh, Wisconsin. PSI designs, engineers and manufactures customized low and medium-voltage power quality, power generation and distribution equipment. PSI’s product portfolio includes metal-enclosed, metal-clad and padmount switchgear, serving the utility, commercial, industrial and renewable energy markets since 1982. The acquisition of PSI is a key addition to our electrical switchgear portfolio. The addition of PSI’s low-voltage and padmount switchgear allows AZZ to offer a comprehensive portfolio of customized switchgear solutions to both existing and new customers in a diverse set of industries.

On June 30, 2017, we completed the acquisition of the assets of Enhanced Powder Coating Ltd., (“EPC”), a privately held, high specification, National Aerospace and Defense Contractors Accreditation Program, ("NADCAP"), certified provider of powder coating, plating and anodizing services based in Gainesville, Texas. EPC, founded in 2003, offers a full spectrum of finish technology including powder coating, abrasive blasting and plating for heavy industrial, transportation, aerospace and light commercial industries. The acquisition of EPC is consistent with our strategic initiative to grow our Metal Coatings segment with products and services that complement our industry-leading galvanizing business.

These acquisitions were not significant individually or in the aggregate. Accordingly, disclosures of the purchase price allocations and unaudited pro forma results of operations have not been provided.


9.	~~Subsequent Events~~

On March 31, 2018, the Company made the final principal payment of $14.3 million to fully settle the 2008 Senior Notes on the scheduled maturity date.


8.	Acquisitions

On March ~~12,~~22, 2018, the Company purchased certain assets through a bankruptcy sales process from Lectrus Corporation, a privately-held corporation based in Chattanooga, Tennessee. Lectrus designs and manufactures custom metal enclosures and provides electrical and mechanical integration. The acquisition will complement AZZ's current metal enclosure and switchgear businesses.

On February 1, 2018, the Company completed the acquisition of all the assets and outstanding shares of Rogers Brothers Company ("Rogers Brothers"), a privately held company, based in Rockford, Illinois. Rogers Brothers provides galvanizing services to a multi-state area within the Midwest. The acquisition supports AZZ's goal of continued geographic expansion as well as portfolio expansion of its metal coatings services. The goodwill arising from thisThis acquisition was ~~allocated to~~not significant. Accordingly, disclosures of the ~~Metal Coatings Segment~~purchase price allocation and isunaudited pro forma results of operations have not ~~deductible for income tax purposes.~~been provided.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~FORWARD LOOKING STATEMENTS~~Forward Looking Statements

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,” “should,” “expects,” “plans,” “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. In addition, certain factors could affect the outcome of the matters described herein. This Quarterly Report on Form 10-Q may contain forward-looking statements that involve risks and uncertainties including, but not limited to, changes in customer demand and response to products and services offered by AZZ, including demand by the power generation markets, electrical transmission and distribution markets, the industrial markets, and the hot dip galvanizing markets; prices and raw material cost, including zinc and natural gas which are used in the hot dip galvanizing process; changes in the political stability and economic conditions of the various markets that AZZ serves, foreign and domestic, customer requested delays of shipments, acquisition opportunities, currency exchange rates, adequacy of financing, and availability of experienced management and employees to implement AZZ’s continued growth strategy; a downturn in market conditions in any industry relating to the products we inventory or sell or the services that we provide; the continuing economic volatility in the U.S. and other markets in which we operate; acts of war or terrorism inside the United States or abroad; natural disasters in the countries in which we operate; and other changes in economic and financial conditions. AZZ has provided additional information regarding risks associated with the business in AZZ’s Annual Report on Form ~~10-K/A~~10-K for the fiscal year ended February 28, ~~2017~~2018 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.

You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. These statements are based on information as of the date hereof and AZZ assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

The following discussion should be read in conjunction with management’s discussion and analysis contained in our Annual Report on Form ~~10-K/A~~10-K for the fiscal year ended February 28, ~~2017,~~2018, and with the condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.

~~Restatement~~Adoption of ~~Previously Issued Financial Statements~~Revenue Recognition Standard

~~As previously disclosed,~~On March 1, 2018, we ~~determined that~~adopted Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) and the related amendments ("ASC 606") using the modified retrospective method applied to those contracts which were not completed as of February 28, 2018. Results for ~~certain contracts within our Energy Segment for which revenue was historically recognized upon contract completion~~operating periods beginning on or after March 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted and ~~transfer of title, we instead should have applied the percentage-of-completion method~~continue to be reported in accordance with the ~~FASB’s Accounting Standards Codification No. 605-35,~~ ~~Construction-Type~~accounting standards in effect for those periods. However, for the three and ~~Production-Type Contracts. In general, the percentage-of-completion method results in a revenue recognition pattern over time as a project progresses as opposed to deferring revenues until contract completion.~~

~~We concluded that~~nine months ended November 30, 2018, the impact of applying ASC 606 as opposed to applying legacy accounting guidance did not result in a significant change to reported revenues or costs of revenues. Accordingly, no reconciliation has been provided to show the percentage-of-completion method to our revenue contracts was materially different from its previously reported results under our historical practice. As a result, we are restating our consolidated financial statementsdifference between applying ASC 606 and legacy guidance for the ~~periods impacted.~~three and nine months ended November 30, 2018. In addition, there was no cumulative effect adjustment to the beginning retained earnings on March 1, 2018 related to the adoption. See Note 2 to the ~~Condensed Consolidated Financial Statements within Item 1~~condensed consolidated financial statements included herein for ~~additional information and~~ a ~~reconciliation~~description of our accounting policy resulting from the ~~previously reported amounts to the restated amounts.~~adoption of ASC 606.

~~RESULTS OF OPERATIONS~~Results of Operations

We have two distinct operating segments, the Energy ~~Segment~~segment and the Metal Coatings ~~Segment,~~segment, as defined in our Annual Report on Form ~~10-K/A~~10-K for the fiscal year ended February 28, ~~2017~~.2018. Management believes that the most meaningful analysis of our results of operations is to analyze our performance by segment. We use revenue and operating income by segment to evaluate our segments. Segment operating income consists of net sales less cost of sales and selling, general and administrative expenses that are specifically identifiable to a segment. For a reconciliation of segment operating income to consolidated operating income, see Note 5 to our quarterly consolidated financial statements included in this Quarterly Report on Form 10-Q.

Orders and Backlog

Our entire backlog relates to our Energy Segment and was ~~$283.2~~$307.8 million as of November 30, ~~2017, a decrease~~2018, an increase of ~~$34.8~~$42.4 million, or ~~10.9%~~16.0%, as compared to ~~$317.9~~$265.4 million as of February 28, ~~2017~~.2018. Our backlog ~~decreased $26.2~~increased $24.6 million, or ~~8.5%~~8.7%, as compared to the same period in the prior fiscal year. Both of these ~~decreases~~increases were primarily the result of ~~a softer market in~~several large international orders, higher overall activity within the ~~first three quarters of fiscal 2018~~Energy Segment and ~~the $11.0 million de-booking~~incremental business generated from ~~the cancellation of the Westinghouse VC Summer project noted further below~~our acquisitions completed during the ~~third quarter of fiscal year 2018.~~previous twelve months. For the three months ended November 30, ~~2017,~~2018, our ~~book-to-bill~~book-to-revenue ratio ~~decreased~~increased slightly to ~~0.86~~0.88 to 1 from ~~0.97~~0.86 to 1 when compared to same period of fiscal ~~2017~~2018 and our incoming net orders ~~decreased~~increased by ~~$42.1~~$31.5 million, or ~~19.0%~~17.5%.

The table below includes the progression of the backlog (in ~~thousands, unaudited, restated)~~thousands):


	Period Ended			Period Ended			Period Ended				Period Ended
Backlog	2/28/2017	$	317,922	02/29/2016	$	310,623	2/28/2018	$	265,417		2/28/2017	$	317,922
Net bookings		193,754			250,479			295,738				193,754
Acquired backlog		—			11,903			6,006				—
Shipments		205,283			250,366
Revenues recognized								(262,236		)		(205,283		)
Backlog	5/31/2017	306,393		5/31/2016	322,639		5/31/2018	304,925			5/31/2017	306,393
Book to ship ratio		0.94			1.00
Book to revenue ratio								1.13				0.94
Net bookings		190,055			193,712			253,882				190,055
Shipments		196,329			200,790
Revenues recognized								(222,787		)		(196,329		)
Backlog	8/31/2017	300,119		8/31/2016	315,561		8/31/2018	336,020			8/31/2017	300,119
Book to Ship Ratio		0.97			0.96
Book to revenue ratio								1.14				0.97
Net bookings		179,783			221,874			211,273				179,783
Acquired backlog		11,417			—			—				11,417
Shipments		208,158			228,116
Revenues recognized								(239,516		)		(208,158		)
Backlog	11/30/2017	283,161		11/30/2016	309,319		11/30/2018	307,777			11/30/2017	283,161
Book to Ship Ratio		0.86			0.97
Book to revenue ratio								0.88				0.86

Segment Revenues

For the three and nine months ended November 30, ~~2017,~~2018, consolidated revenues ~~decreased $20.0~~increased $31.4 million, or ~~8.7%~~15.1%, and ~~$69.5~~$114.8 million or ~~10.2%~~18.8%, respectively, as compared to the same periods in fiscal ~~2017.~~2018.

The following table reflects the breakdown of revenue by segment (in thousands):


	Three Months Ended November 30,				Nine Months Ended November 30,
	2017		2016		2017		2016		Three Months Ended November 30,				Nine Months Ended November 30,
			(Restated)				(Restated)		2018		2017		2018		2017
Net sales:
Energy	$	107,021	$	136,210	$	317,526	$	385,357	$	132,025	$	107,021	$	385,526	$	317,526
Metal Coatings	101,137		91,906		292,244		293,915		107,491		101,137		339,013		292,244
Total net sales	$	208,158	$	228,116	$	609,770	$	679,272	$	239,516	$	208,158	$	724,539	$	609,770

Revenues for the Energy ~~Segment decreased~~segment increased $25.0 million or 23.4%, and $68.0 million or 21.4%, respectively, for the three and nine months ended November 30, ~~2017, to $107.0 million~~2018 as compared to the same ~~period~~periods in fiscal ~~2017. The decrease~~2018. These increases in ~~revenue during the third quarter was~~revenues were caused by several positive factors including ~~reduced~~improved turnarounds in the U.S. refinery market, increased international projects and an uptick in our electrical business. These increases were also attributable to incremental revenues from our acquisitions completed during the past twelve months and were partially offset by continued softness in the ~~petrochemical~~nuclear market, ~~negative impacts from the Atlantic hurricane activity, cancellations and delays~~which is due in ~~the release of several large projects in the U.S. and overseas. Revenues decreased 17.6% for the nine months ended November 30, 2017, to $317.5 million as compared~~part to the ~~same period in fiscal 2017, primarily on the turnaround softness in the first half of the year and the effects on the nuclear market from the~~ Westinghouse ~~Electric Company bankruptcy filed on March 29, 2017.~~Bankruptcy discussed below.

Revenues for the Metal Coatings ~~Segment~~segment increased ~~10.0%~~$6.4 million or 6.3%, and $46.8 million or 16.0%, respectively, for the three and nine months ended November 30, ~~2017, to $101.1 million~~2018 as compared to the same ~~period~~periods in fiscal ~~2017. The increase was~~2018. These increases were a result of higher selling prices and higher volumes inof steel processed during the ~~period~~periods driven primarily by improvements in various markets. ~~Revenues decreased 0.6% for~~These increases were also attributable to incremental revenues from our acquisitions completed during the ~~nine months ended~~past twelve months.

~~November 30, 2017, to $292.2 million as compared to the same period in fiscal 2017 due to lower volumes in the first half of fiscal 2018, somewhat offset by higher selling prices.~~

Segment Operating Income

The following table reflects the breakdown of operating income by segment (in thousands):



	Three Months Ended November 30,						Nine Months Ended November 30,
	2018			2017			2018			2017
Operating income (loss):
Energy	$	11,532		$	(12,103	)	$	25,763		$	(3,029	)
Metal Coatings	18,321			21,681			65,581			66,332
Corporate	(7,084		)	(8,024		)	(27,774		)	(24,339		)
Total operating income	$	22,769		$	1,554		$	63,570		$	38,964

Operating income for the Energy ~~Segment decreased~~segment increased by ~~$25.0~~$23.6 million or ~~194.1%~~195.0%, and $28.8 million or 950.8%, respectively, for the three and nine months ended November 30, 2018 as compared to ~~a loss of $12.1 million~~the same periods in fiscal 2018. Operating margins were 8.7% and (11.3)%, for the three months ended November 30, 2018 and 2017, as compared to the same period in fiscal 2017. This decrease is attributable to the reduction in refinery turnarounds described above, which typically carry a higher margin, coupled with margin degradations on certain large projects in the U.S.respectively, and ~~overseas. Operating income decreased $44.9 million, or 107.2%, to a loss of $3.0 million~~6.7% and (1.0)% for the nine months ended November 30, 2018 and 2017, ~~as compared to the same period in fiscal 2017. This decrease is~~respectively. These increases were primarily attributable to the ~~same impact of the market as discussed for the quarterly comparison~~positive factors noted above and ~~also due to job cancellations associated with the Westinghouse bankruptcy.~~improvements in project margins. In addition, for the three and nine months ended November 30, 2017, the Company recognized an impairment charge of $8.3 million, classified within cost of sales, related to property, plant and equipment that was retired ~~prior to the end of its useful life~~ and a provision for doubtful accounts of $2.9 million, classified within selling, general and administrative, resulting from an adverse court decision related to certain outstanding accounts receivables. No such charges were recorded in the ~~prior year comparable periods.~~current fiscal year.

Operating income for the Metal Coatings ~~Segment increased~~segment decreased by ~~$0.3~~$3.4 million or ~~1.6%~~15.7% and $0.8 million or 1.2%, respectively, for the three and nine months ended November 30, 2018 as compared to the same periods in fiscal 2018. These decreases were primarily attributable to higher zinc and labor costs and a one-time charge of $1.3 million incurred during the second quarter of fiscal 2019 for asset impairments, employee severance and other disposal costs related to the consolidation of two galvanizing facilities in the Gulf Coast region of the United States. These unfavorable trends were partially offset by increased volumes and selling prices. Operating margins were 17.0% and 21.4%, for the three months ended November 30, 2018 and 2017, as compared to the same period in fiscal 2017. The slight increase was attributable to higher volumes in the third quarter of fiscal 2018, partially offset by lower margins due to an increase in the price of zinc. Operating income increased by $5.7 million, or 9.3%,respectively and 19.3% and 22.7% for the nine months ended November 30, 2018 and 2017, ~~as compared to the same period of fiscal 2017. Excluding the impact of the realignment charges of $7.3 million taken in the second quarter of fiscal 2017, the decrease is primarily~~respectively. These declines were attributable to ~~lower volumes in~~higher zinc and labor costs, which were not fully offset by increased selling prices, and the ~~first half~~one-time charge for the consolidation of ~~fiscal 2018 as compared to the prior year.~~facilities.

Corporate Expenses

Corporate expenses ~~were relatively flat~~decreased by $0.9 million or 11.2%, and increased $3.4 million or 14.0%, respectively, for the three and nine months ended November 30, ~~2017~~2018 as compared to the prior year comparable ~~period. For~~periods. During the three and nine months ended November 30, ~~2017, corporate expenses decreased by $0.5 million or 2.2%~~2018, we recorded lower share-based compensation expense as a result of certain employee performance share unit grants that were forfeited when various vesting conditions were not satisfied during the fiscal year. For the nine months ended November 30, 2018 as compared to the prior year comparable period, ~~due primarily to lower~~the decline in share-based compensation expense was more than offset by increased employee compensation, ~~costs, partially offset by the higher costs for~~ outside professional ~~services.~~services and general corporate marketing activities.

Interest Expense

Interest expense for the three and nine ~~month periods~~months ended November 30, ~~2017~~2018 was $3.7 million and $11.5 million, respectively, as compared to $3.5 million and $10.3 million ~~respectively. Interest expense~~ for ~~the three and nine month periods ended November 30, 2016 was $3.7 million and $11.2 million, respectively. The decrease in interest expense in comparison to the same respective periods in~~ the prior year ~~was~~comparable periods. These increases were the result of ~~a lower~~higher interest rates on variable rate debt and slightly higher average outstanding debt ~~balance. As of November 30, 2017, our gross outstanding debt was $307.3 million, compared to $312.1 million outstanding as of November 30, 2016.~~balances. Our gross debt to equity ratio was 0.46 to 1 as of November 30, 2018, compared to 0.57 to 1 as of November 30, ~~2017, compared to 0.59 to 1 as of November 30, 2016.~~

~~Net Loss On Sale of Property, Plant and Equipment and Insurance Proceeds~~

For the nine months ended November 30, 2017, the amounts recorded were primarily driven from the realized loss from a property sale in the second fiscal quarter and the amounts recorded for the three months ended November 30, 2017 were insignificant. For the three and nine months ended November 30, 2016, the amounts recorded were insignificant.

~~Other Income, Net~~

For the three and nine months ended November 30, 2017, the amounts recorded to other income were primarily attributable to net foreign exchange gains and royalty income. For the three and nine months ended November 30, 2016, the amounts recorded to other income were primarily attributable to an insurance receivable of $0.6 million and net foreign exchange gains.2017.

Income Taxes

The provision for (benefit from) income taxes reflects an effective tax rate of ~~(91.6%)~~17.8% and (91.6)% for the three months ended November 30, 2018 and 2017, ~~as compared to 28.8% for~~respectively, and the ~~comparable period in fiscal 2017. The difference in rate is~~change was primarily attributable to the net loss incurred and various tax ~~credits and~~benefits received during the ~~decline in net income.~~

prior year period. The provision for income taxes reflects an effective ~~tax~~ rate of 19.9% and 24.2%, for the nine months ended November 30, 2018 and 2017, ~~as compared to 27.3% for~~respectively, and the ~~comparable period in fiscal 2017. The difference in rate is~~decrease was primarily attributable to ~~state tax benefits.~~

~~Income Taxes - Forward Looking Statement~~

~~In December 2017, subsequent to~~ the ~~period covered by this Form 10-Q, the President of the U.S. signed the~~ Tax Cuts and Jobs Act of ~~2017~~ (the “Act”). Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the elimination of certain deductions and imposing a mandatory one-time tax on accumulated earnings of foreign subsidiaries. The Act also includes international provisions, which generally establish a territorial-style system for taxing foreign source income of domestic multinational corporations. In the fourth quarter of our fiscal year 2018, the period in which the legislation was enacted, we recorded a $23.2 million reduction in tax expense related to the Act. The provisional benefit related to the remeasurement of certain deferred tax assets and liabilities was $25.0 million. The provisional expense related to the one-time tax on the mandatory deemed repatriation of foreign earnings was $1.8 million. SEC Staff Accounting Bulletin No. 118, ~~Income Tax Accounting Implications of the Tax Cuts and Jobs Act~~ ("SAB 118"), allows us to provide a provisional estimate of the impacts of the Tax Act due to the complexities involved in accounting for the enactment of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the enactment of the Tax Act to complete the accounting under ASC 740, ~~Income Taxes~~.We have calculated our best estimate of the impact of the Act in our fiscal year 2018 annual income tax provision based on our understanding of the Act and guidance available at the date of this filing.2017.

Westinghouse Electric Company Bankruptcy Case

We had existing contracts with subsidiaries of Westinghouse Electric Company (“WEC”). WEC and the relevant subsidiaries (the "Debtors") filed relief under Chapter 11 of the Bankruptcy Code on March 29, 2017 in the United States Bankruptcy Court

for the Southern District of New York, jointly administered as In re Westinghouse Electric Company, et al., Case No. 17-10751 (the "Bankruptcy Case"). To date, WEC has continued to operate under a Debtor-in-Possession Financing Facility and we continue to honor their executory contracts. The Company has been collecting on post-petition amounts due and owed. On February 22, 2018, the United States Bankruptcy Court for the Southern District of New York approved the Debtors’ Modified First Amended Disclosure Statement for the Joint Chapter 11 Plan of Reorganization. In the Disclosure Statement, the Debtors estimated a 98.9% to 100% distribution on Allowed General Unsecured Claims. We have approximately $12 million of such claims filed with the court, which includes 100% of our pre-petition claims. The total claims filed exceed the book value of our exposure.

At time of the Bankruptcy Case, we were subcontractors on various WEC engagements, including the VC Summer and Vogtle Bridge projects. The ownership of VC Summer halted work earlier in the year and, during the third quarter of fiscal 2018, we de-booked $11.0 million from backlog related to this project. Also during the third quarter of fiscal 2018, we received a notice of cancellation for the Vogtle Bridge project, which negatively impacted our sales and margin for the second half of fiscal year 2018 by approximately $6.1 million and $1.2 million, respectively.

~~LIQUIDITY AND CAPITAL RESOURCES~~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 are generally for operating activities, cash dividend payments, capital improvements, debt repayment, acquisitions and share repurchases. 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.

Cash Flows

The following table summarizes our cash flows by category for the periods presented (in thousands):



	Nine Months Ended November 30,
	2018			2017
Net cash provided by operating activities	$	60,395		$	38,710
Net cash used in investing activities	(21,329		)	(54,174		)
Net cash provided by (used in) financing activities	(41,565		)	14,211

For the nine month period ended November 30, ~~2017,~~2018, net cash provided by operating activities was ~~$38.7~~$60.4 million, net cash used in investing activities was ~~$54.2~~$21.3 million, net cash ~~provided by~~used in financing activities was ~~$14.2~~$41.6 million, and ~~an increase~~a decrease of ~~$0.6~~$0.9 million from the net effect of exchange rate changes on cash resulting in a net decrease in cash and cash equivalents of ~~$0.7~~$3.4 million. In comparison to the comparable period in fiscal ~~2017,~~2018, the results in the statement of cash flows for operating activities for the nine ~~months~~month period ended November 30, ~~2017,~~2018, are primarily attributable to ~~a decrease~~the increase in net income ~~partially offset by~~and more favorable impacts of changes in working ~~capital and increased non-cash charges.~~capital. The Company's use of cash for investing activities was ~~higher~~lower due to ~~increased~~decreased capital expenditures and lower spending for ~~acquisitions year over year, partially offset by lower capital expenditures. Cash provided by~~acquisitions. Net cash used in financing activities was higher during the nine ~~months~~month period ended November 30, ~~2017~~2018 due primarily to ~~increased~~ net ~~borrowings, which was partially offset by higher debt repayments.~~payments made on outstanding borrowings.

Our working capital was ~~$199.0~~$239.6 million as of November 30, ~~2017~~,2018, as compared to ~~$185.2~~$197.4 million at ~~November 30, 2016~~.February 28, 2018.

~~On March 21, 2017, we executed the Amended~~Financing and Restated Credit Agreement (the “2017 Credit Agreement”) with Bank of America and other lenders. The 2017 Credit Agreement amended the Credit Agreement entered into on March 27, 2013 by the following: (i) extending the maturity date until March 21, 2022, (ii) providing for a senior revolving credit facility in a principal amount of up to $450 million, with an additional $150 million accordion, (iii) including a $75 million sublimit for the issuance of standby and commercial letters of credit, (iv) including a $30 million sublimit for swing line loans, (v) restricting indebtedness

incurred in respect of capital leases, synthetic lease obligations and purchase money obligations not to exceed $20 million, (vi) restricting investments in any foreign subsidiaries not to exceed $50 million in the aggregate, and (vii) including various financial covenants and certain restricted payments relating to dividends and share repurchases as specifically set forth in the 2017 Credit Agreement. The financial covenants, as defined in the 2017 Credit Agreement, require us to maintain on a consolidated basis a Leverage Ratio not to exceed 3.25:1.0 and an Interest Coverage Ratio of at least 3.00:1.0. The 2017 Credit Agreement will be used to finance working capital needs, capital improvements, dividends, future acquisitions, letter of credit needs and share repurchases.

Interest rates for borrowings under the 2017 Credit Agreement are based on either a Eurodollar Rate or a Base Rate plus a margin ranging from 0.875% to 1.875% depending on our Leverage Ratio (as defined in the Credit Agreement). The Eurodollar Rate is defined as LIBOR for a term equivalent to the borrowing term (or other similar interbank rates if LIBOR is unavailable). The Base Rate is defined as the highest of the applicable Fed Funds rate plus 0.50%, the Prime rate, or the Eurodollar Rate plus 1.0% at the time of borrowing. The Credit Agreement also carries a Commitment Fee for the unfunded portion ranging from 0.175% to 0.30% per annum, depending on our Leverage Ratio.Capital

As of November 30, 2017, we had $168.0 million of outstanding debt against the revolving credit facility provided and letters of credit outstanding in the amount of $23.7 million, which left approximately $258.3 million of additional credit available under the 2017 Credit Agreement.

On March 31, 2008, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) pursuant to which the Company issued $100.0 million aggregate principal amount of its 6.24% unsecured Senior Notes (the “2008 Notes”) due March 31, 2018 through a private placement (the “2008 Note Offering”). On March 31, 2018, the Company ~~made the final principal payment~~had $273.0 million of ~~$14.3 million to fully settle the 2008 Senior Notes on the scheduled maturity date.~~

The Company entered into an additional Note Purchase Agreement on January 21, 2011 (the “2011 Agreement”), pursuant to which the Company issued $125.0 million aggregate principal amount of its 5.42% unsecured Senior Notes (the “2011 Notes”), due in January of 2021,floating and fixed rate notes outstanding with varying maturities through ~~a private placement (the “2011 Note Offering”). Pursuant to the 2011 Agreement, the Company's payment obligations with respect to the 2011 Notes may be accelerated under certain circumstances.~~

~~The 2008 Notes~~fiscal 2023 and the 2011 Notes each provide for various financial covenants requiring us, among other things, to a) maintain on a consolidated basis net worth (as defined in the Note Purchase Agreement) equal to at least the sum of $116.9 million plus 50.0% of future net income; b) maintain a ratio of indebtedness to EBITDA (as defined in Note Purchase Agreement) not to exceed 3.25:1.00; c) maintain on a consolidated basis a Fixed Charge Coverage Ratio (as defined in the Note Purchase Agreement) of at least 2.0:1.0; d) not at any time permit the aggregate amount of all Priority Indebtedness (as defined in the Note Purchase Agreement) to exceed 10.0% of Consolidated Net Worth.

~~As of November 30, 2017,~~ the Company was in compliance with all of the covenants related to these outstanding borrowings. During the first quarter of fiscal 2019, the Company repaid $14.3 million of outstanding principal related to its ~~debt covenants.~~outstanding notes on the scheduled maturity date. As of November 30, 2018, the Company had approximately $282.9 million of additional credit available for future draws or letters of credit.

~~Historically, we~~For additional information on the Company's outstanding borrowings see Note 7 to the condensed consolidated financial statements and further below under Contractual Commitments.

Share Repurchase Program

In January of 2012, our Board authorized the repurchase of up to ten percent of the outstanding shares of our Common Stock. The share repurchase authorization does not have an expiration date, and the amount and prices paid for any future share purchases under the authorization will be based on market conditions and other factors at the time of the purchase. Repurchases under this share repurchase authorization would be made through open market purchases or private transactions in accordance with applicable federal securities laws, including Rule 10b-18 under the Exchange Act. The Company did not ~~experienced a significant impact on our operations from increases in general inflation other than for specific commodities.~~ make any repurchases of its common shares during the nine months ended November 30, 2018.

Other Exposures

We have exposure to commodity price increases in both segments of our business, primarily copper, aluminum, steel and nickel based alloys in the Energy ~~Segment~~segment and zinc and natural gas in the Metal Coatings ~~Segment.~~segment. We attempt to minimize these

increases through escalation clauses in customer contracts for copper, aluminum, steel and nickel based alloys, when market conditions allow and through fixed cost contract purchases on zinc. 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.

~~OFF BALANCE SHEET TRANSACTIONS AND RELATED MATTERS~~Off Balance Sheet Arrangements and Contractual Obligations

~~Other than operating leases discussed below,~~As of November 30, 2018, the Company did not have any off-balance sheet arrangements as defined under SEC rules. Specifically, there ~~are~~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, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources of the Company.

~~CONTRACTUAL COMMITMENTS~~

~~Leases~~

WeThe following summarizes our operating lease ~~various facilities under non-cancelable operating leases with an initial term in excess of one year.~~

~~Commodity pricing~~

~~The Company manages its exposure to commodity prices through~~obligations, debt principal payments, and interest payments (based on current interest rates for variable rate debt) for the ~~use~~remainder of the ~~following:~~next five years and beyond (in thousands):

In the Energy Segment, we have exposure to commodity pricing for copper, aluminum, steel, tungsten and nickel based alloys. Because the Energy Segment does not commit contractually to minimum volumes, increases in price for these items are normally managed through escalation clauses in customer contracts, although during difficult market conditions these escalation clauses may not be obtainable. In addition, we attempt to enter into firm pricing contracts with our vendors on material at the time we receive orders from our customers to minimize risk.

In the Metal Coatings Segment, we utilize contracts with our zinc suppliers that include protective caps and fixed cost contracts to guard against rising zinc prices. We also secure firm pricing for natural gas supplies with individual utilities when possible. Management believes these agreements ensure adequate supplies and partially offset exposure to commodity price swings.

We have no contracted commitments for any commodities including steel, aluminum, natural gas, nickel based alloys, copper, zinc or any other commodity, except for those entered into under the normal course of business.

~~Other~~



	Operating Leases		Long-Term Debt		Interest		Total
Fiscal:
2019	$	2,294	$	—	$	5,037	$	7,331
2020	8,076		—		13,373		21,449
2021	6,160		125,000		13,373		144,533
2022	5,932		—		6,598		12,530
2023	5,666		148,000		668		154,334
Thereafter	26,189		—		—		26,189
Total	$	54,317	$	273,000	$	39,049	$	366,366

As of November 30, ~~2017,~~2018, we had outstanding letters of credit in the amount of ~~$38.2 million, with $23.7 million issued under the 2017 Credit Agreement and $14.5 million issued by HSBC Bank (China).~~$39.4 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 or performance periods.

~~The following summarizes our operating leases, debt principal payments, and interest payments for the remainder of the next five years and beyond.~~

Operating
Leases Long-Term
Debt Interest Total
Fiscal: (In thousands)
2018 $ 1,847
$ —
$ 4,531
$ 6,378
2019 6,888
14,286
12,161
33,335
2020 5,826
—
11,715
17,541
2021 4,932
125,000
11,715
141,647
2022 4,826
—
4,940
9,766
Thereafter 22,111
168,000
509
190,620
Total $ 46,430
$ 307,286
$ 45,571
$ 399,287

~~CRITICAL ACCOUNTING POLICIES AND ESTIMATES~~Critical Accounting Policies and Estimates

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. On an ongoing basis, we evaluate our estimates and assumptions. These estimates and assumptions are based on current facts, historical experience, and various other factors that we believe are reasonable under the circumstances to determine reported amounts of assets, liabilities, revenue and expenses that are not readily apparent from other sources.

During the nine ~~months~~month period ended November 30, ~~2017,~~2018, with the exception of the adoption of ASC 606, there were no significant changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form ~~10-K/A~~10-K for the year ended February 28, ~~2017.~~2018. See Note 2 to the condensed consolidated financial statements included herein for our updated critical accounting policy and estimates related to revenue recognition upon the adoption of ASC 606.

~~RECENT ACCOUNTING PRONOUNCEMENTS~~Recent Accounting Pronouncements

See Note 1 ~~The Company and Basis of Presentation, in Part I, Item 1. Financial Statements, of this Quarterly Report on Form 10-Q,~~to the condensed consolidated financial statements, included herein, 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Market~~There have been no material changes to the Company’s market risk ~~affecting our operations results primarily from changes in interest rates and commodity prices. We have only limited involvement with derivative financial instruments and are not~~disclosures during the first nine months of fiscal 2019. For a ~~party to any leveraged derivatives.~~

Indiscussion of the ~~Energy Segment, we have~~Company’s exposure to ~~commodity pricing~~market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of our Annual Report on Form 10-K for copper, aluminum, steel, tungsten and nickel based alloys. Increases in price for these items are normally managed through escalation clauses in our customers' contracts, although during difficult market conditions customers' may resist these escalation clauses. In addition, we attempt to enter into firm pricing contracts with our vendors on material at the time we receive orders from our customers to minimize risk. We manage our exposures to commodity prices, primarily zinc used in our Metal Coatings Segment, by utilizing agreements with zinc suppliers that include protective caps and fixed contracts to guard against escalating commodity prices. 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.

~~The Company has exposure to foreign currency exchange rates related to our operations in Canada, China, Brazil, Poland, and the Netherlands.~~

We do not believe that a hypothetical change of 10% of the interest rates or currency exchange rates that are currently in effect or a change of 10% of commodity prices would have a significant adverse effect on our results of operations, financial position, or cash flows as long as we are able to pass along the increases in commodity prices to our customers. However, there can be no assurance that either interest rates, 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 could have an adverse effect on our results of operations, financial position, and cash flows.

year ended February 28, 2018.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer, management of the Company has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, due to the material weakness described below, the Company's disclosure controls and procedures were not effective as of the end of the period covered by this Form 10-Q to provide reasonable assurance that information required to be disclosed by us in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and were not effective as of the end of the period covered by this Form 10-Q to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely discussions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting

~~Subsequent to~~As previously disclosed, after filing ~~the Company’s quarterly report on~~our Form 10-Q for the ~~period~~quarter ended August 31, 2017, an error was discovered related to the Company’s historical revenue recognition policies and procedures. In particular, the Company determined that for certain contracts within its Energy ~~Segment~~segment for which revenue was historically recognized upon contract completion and transfer of title, the Company instead should have applied the percentage-of-completion method in accordance with the FASB’s Accounting Standards Codification No. 605-35, Construction-Type and Production-Type Contracts. This error resulted in a material misstatement of the financial statements and required restatement of the financial statements included in the Company’s Form 10-K for the fiscal year ended February 28, 2017 and in the Company’s Form 10-Q for the quarterly periods ended May 31, 2017 and August 31, 2017. This error, which was not detected timely by management, was the result of inadequate design of controls pertaining to the Company’s review and ongoing monitoring of its revenue recognition policies. The deficiency represents a material weakness in the Company’s internal control over financial reporting.

Management is actively engaged in the ~~planning for, and~~ implementation of remediation efforts to address the material weakness identified above. The remediation plan includes i) the implementation of new controls designed to evaluate the appropriateness of revenue recognition policies and procedures, ii) new controls over recording revenue transactions, and iii) additional training.

Management believes the measures described above and others that may be implemented will remediate the material weaknesses that we have identified. As management continues to evaluate and improve internal control over financial reporting, we may decide to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures identified.

Procedures are in place, but subsequent testing of the operational effectiveness of the new controls is necessary to validate that the material weakness is fully remediated.

Subject to these remediation efforts, ~~that were implemented after November 30, 2017,~~ there have been no significant changes in the Company's internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On January 11, 2018, Logan Mullins, acting on behalf of himself and a putative class of persons who purchased or otherwise acquired the Company's securities between April 22, 2015 and January 8, 2018, filed a class action complaint in the U.S. District Court for the Northern District of Texas against the Company and two of its executive officers, Thomas E. Ferguson and Paul W. Fehlman. Logan Mullins v. AZZ, Inc., et al., Case No. 4:18-cv-00025-Y. The complaint alleges, among other things, that the Company's SEC filings contained statements that were rendered materially false and misleading by the Company's alleged failure to properly recognize revenue related to certain contracts in its Energy Segment in purported violation of (1) Section 10(b) of the Exchange Act and Rule 10b-5 and (2) Section 20(a) of the Exchange Act. The plaintiffs seek an award of compensatory and punitive damages, interests, attorneys' fees and costs. The Company denies the allegations and believes it has strong defenses to vigorously contest them. The Company cannot predict the outcome of this action nor when it will be resolved. If the plaintiffs were to prevail in this matter, the Company could be liable for damages, which could potentially be material and could adversely affect its financial condition or results of operations.

In addition, the Company and its subsidiaries are named defendants in various routine lawsuits incidental to our business. These proceedings include labor and employment claims, use of the Company’s intellectual property, worker’s compensation and various environmental matters, all arising in the normal course of business. Although the outcome of these lawsuits or other proceedings cannot be predicted with certainty, and the amount of any potential liability that could arise with respect to such lawsuits or other matters cannot be predicted at this time, management, after consultation with legal counsel, does not expect liabilities, if any, from these claims or proceedings, either individually or in the aggregate, to have a material effect on the Company’s financial position, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes in the risk factors disclosed under Part I, Item 1A of our Annual Report on Form ~~10-K/A~~10-K for the fiscal year ended February 28, ~~2017.~~2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The ~~following tab provides information with respect to purchases~~Company did not make any repurchases of its common ~~stock of the Company made~~shares during the three months ended November 30, ~~2017, by the Company or any "affiliated purchaser" as defined in Rule 10b-18(a)(3) under the Exchange act:~~

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs

Sep 1, 2017 through Sep 30, 2017 —
$ —
—
1,102,800
Oct 1, 2017 through Oct 31, 2017 24,400
46.77
24,400
1,078,400
Nov 1, 2017 through Nov 30, 2017 25,600
46.58
25,600
1,052,800
Total 50,000
$ 46.67
50,000
1,052,800
2018.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits



3.1		Amended and Restated Certificate of Formation of AZZ Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by the Registrant on July 14, 2015)

3.2		Amended and Restated Bylaws of AZZ Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed by the Registrant on January 23, 2017)

10.1		Note Purchase Agreement dated March 31, 2008,, by and among AZZ incorporated and the purchasers listed therein (incorporated by reference to Exhibit 10(1) ofto the Current Report on Form 8-K filed by the ~~registrant~~Registrant on April 2, 2008).

~~10.2~~10.2*		AZZ ~~incorporated~~Inc. 2018 Employee Stock Purchase Plan (incorporated by reference to Appendix ~~B of~~A to the Registrant's Definitive Proxy Statement ~~for the 2008 Annual Shareholders Meeting)~~on Form DEFA filed on May 25, 2018.).

10.3		Note Purchase Agreement,, dated as of January 20, 2011, by and among AZZ incorporated and the purchasers identified therein (incorporated by reference to Exhibit 10.1 ofto the Current Report on Form 8-K filed by the ~~registrant~~Registrant on January 21, 2011).

10.4		Amended and Restated Credit Agreement by and between AZZ Inc. as borrower, Bank of America N.A. as Administrative Agent, Swing Line Lender and L/C Issuer, and the other Lender's party thereto (incorporated by reference to Exhibit 10.1 to the ~~Registrant's~~ Current Report on Form 8-K filed by the Registrant on March 24, 2017).

10.5*		AZZ incorporated 2014 Long Term Incentive Plan (incorporated by reference to Appendix A to the Registrant’s Definitive Proxy Statement on Form DEFA filed May 29, 2014).

10.6*		First Amendment to AZZ Inc. 2014 Long Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the ~~registrant~~Registrant on January 21, 2016.

10.7*		~~AZZ Inc. Severance Pay Plan~~ ~~(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on October 3, 2017).~~

31.1		Certification byof Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed Herewith.

31.2		Certification byof Chief Financial Officer ~~Certificate~~ pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed Herewith.

32.1		Certification byof Chief Executive Officer ~~Certificate~~ pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed Herewith.

32.2		Certification of Chief Financial Officer ~~Certificate~~ pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed Herewith.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

* Management contract, compensatory plan or arrangement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



			AZZ Inc. (Registrant)

~~DATE: May 15, 2018~~Date:	January 8, 2019	By:	/s/ Paul W. Fehlman
			Paul W. Fehlman Senior Vice President and Chief Financial Officer

2725



	Nine Months Ended November 30,
	2016
	As Reported			Correction			As Restated
Cash flows from operating activities:
Net income	$	49,337		$	(343	)	$	48,994
Deferred income taxes	(331		)	(207		)	(538		)
Inventories	(20,760		)	13,965			(6,795		)
Net change in billings related to costs and estimated earnings on uncompleted contracts	8,853			(12,130		)	(3,277		)
Other accrued liabilities and income taxes payable	329			(1,285		)	(956		)
Net cash provided by operating activities:	$	57,275		$	—		$	57,275



	November 30, 2017			February 28, 2017
Senior Notes, due in balloon payment in January 2021	$	125,000		$	125,000
Senior Notes, due in annual installments of $14,286 beginning in March 2012 through March 2018	14,286			28,571
Term Note, due in quarterly installments beginning in June 2013 through March 2018	—			49,219
Revolving line of credit with bank	168,000			69,500
Total debt	307,286			272,290
Unamortized debt issuance costs for Senior Notes and Term Note	(434		)	(861		)
Total debt, net	306,852			271,429
Less amount due within one year	(14,286		)	(16,629		)
Debt due after one year, net	$	292,566		$	254,800



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs

Sep 1, 2017 through Sep 30, 2017	—	$	—	—	1,102,800
Oct 1, 2017 through Oct 31, 2017	24,400	46.77		24,400	1,078,400
Nov 1, 2017 through Nov 30, 2017	25,600	46.58		25,600	1,052,800
Total	50,000	$	46.67	50,000	1,052,800