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Acquisitions | 3 Months Ended
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May 31, 2023
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | 2. Acquisitions Precoat Acquisition On May 13, 2022, the Company acquired Precoat Metals for a purchase price of approximately $1.3 billion (the "Precoat Acquisition"). Based in St. Louis, Missouri, Precoat is the leading independent provider of metal coil coating solutions in North America. The acquisition represents a continued transition of the Company to a focused provider of coating and galvanizing services for critical applications. AZZ Precoat Metals contributed revenue of $222.1 million and operating income of $37.7 million to the Company's condensed consolidated statements of operations for the three months ended May 31, 2023. The Company completed the final valuation during the first quarter of fiscal year 2024. The Company accounted for the Precoat Acquisition as a business combination under the acquisition method of accounting. Goodwill from the acquisition of $527.8 million represents the excess purchase price over the estimated value of net tangible and intangible assets and liabilities assumed, and is expected to be deductible for income tax purposes. The Company's chief operating decision maker assesses performance and allocates resources to Precoat separately from the AZZ Metal Coatings segment; therefore, Precoat is accounted for as a separate segment, the AZZ Precoat Metals segment. See Note 6 for more information about the Company's operating segments. Goodwill from the acquisition was allocated to the AZZ Precoat Metals segment. Assets acquired and liabilities assumed in the Precoat Acquisition were recorded at their estimated fair values as of the acquisition date. See Note 15 for additional information regarding certain environmental liabilities assumed as part of the Precoat Acquisition. When determining the fair values of assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. The Company engaged third-party valuation experts to assist in determination of fair value of property and equipment, intangible assets, pension benefit obligation and certain other assets and liabilities. Estimates from third-party experts along with the analysis and expertise of management have formed the basis for the allocation. Management believes that the current information provides a reasonable basis for the fair values of assets acquired and liabilities assumed. As of May 31, 2023, the Company made purchase price allocation adjustments that impacted goodwill, contract assets and accrued expenses. The following table represents the summary of the assets acquired and liabilities assumed, in aggregate, related to the Precoat Acquisition, as of the date of the acquisition (in thousands):
|  | May 13, 2022
Assets |  |
Accounts receivable |  | $ | 77,422 |
Inventories |  | 43,369 |
Contract assets |  | 68,314 |
Prepaid expenses and other |  | 2,247 |
Property, plant and equipment |  | 305,503 |
Right-of-use asset |  | 13,753 |
Goodwill |  | 527,793 |
Deferred tax asset |  | 8,660 |
Intangibles and other assets |  | 446,546 |
Total fair value of assets acquired |  | $ | 1,493,607 |
Liabilities |  |
Accounts payable |  | (99,223) |
Accrued expenses |  | (31,761) |
Other accrued liabilities |  | (5,330) |
Lease liability, short-term |  | (2,440) |
Lease liability, long-term |  | (11,313) |
Other long-term liabilities |  | (60,091) |
Total fair value of liabilities assumed |  | $ | (210,158) |
Total purchase price, net of cash acquired |  | $ | 1,283,449 |
Intangible assets include customer relationships, tradenames and technology. Other long-term liabilities include the Company's pension obligation and certain environmental liabilities. See Notes 14 and 15 for more information about these long-term liabilities. Unaudited Pro Forma Information The following unaudited pro forma financial information for the three months ended May 31, 2023 and 2022 combines the historical results of the Company and the acquisition of Precoat Metals, assuming that the companies were combined as of March 1, 2022. The pro forma financial information includes business combination accounting effects from the Precoat Acquisition, including amortization expense from acquired intangible assets, depreciation expense from acquired property, plant and equipment, interest expense from financing transactions which occurred to fund the Precoat Acquisition, acquisition-related transaction costs and tax-related effects. The pro forma information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition of Precoat Metals had taken place on March 1, 2022 or of future operating performance.
|  | Three Months Ended May 31,
|  | 2023 |  | 2022
Revenue |  | $ | 390,873 |  |  | $ | 400,154 |
Net income from continuing operations(1) |  | $ | 28,522 |  |  | $ | (550) |
(1) Net income for the three months ended May 31, 2022 includes acquisition costs of approximately $45.0 million, of which $11.5 million was incurred by AZZ and $33.5 million was incurred by Precoat Metals prior to the acquisition.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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