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Discontinued Operations | 6 Months Ended
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Aug. 31, 2023
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | 3. Discontinued Operations On September 30, 2022, AZZ contributed its AZZ Infrastructure Solutions ("AIS") segment, excluding AZZ Crowley Tubing, to a joint venture, AIS Investment Holdings LLC (the "AVAIL JV") and sold a 60% interest in the AVAIL JV to Fernweh Group LLC ("Fernweh"). On September 30, 2022, the AVAIL JV was deconsolidated. Beginning October 1, 2022, the Company began accounting for its 40% interest in the AVAIL JV under the equity method of accounting. The AVAIL JV is included in the AZZ Infrastructure Solutions segment. The divestiture of the AZZ Infrastructure Solutions segment represents an intentional strategic shift in our operations and will allow the Company to become a focused provider of coating and galvanizing solutions for critical applications. As a result, the results of the AIS segment were classified as discontinued operations in our condensed statements of operations and excluded from both continuing operations and segment results for the three and six months ended August 31, 2022. As part of recognizing the business as held for sale in accordance with GAAP, the Company was required to measure AIS at the lower of its carrying amount or fair value less cost to sell. As a result of this analysis, during fiscal 2023, the Company recognized an estimated non-cash, pre-tax loss on disposal of $159.9 million, of which $114.9 million was recognized during the three months ended August 31, 2022, and $27.8 million was recognized during the third quarter of fiscal 2023. The loss is included in "Loss on disposal of discontinued operations" in the consolidated statements of operations. The loss was determined by comparing the fair value of the consideration received for the sale of a 60% interest in the AIS JV and the fair value of the Company’s retained 40% investment in the AIS JV with the net assets of the AIS JV immediately prior to the transaction. The fair value of the Company’s retained investment in the AIS JV was determined in a manner consistent with the transaction price received for the sale of the 60% interest in the AIS JV. The results of operations from discontinued operations for the three and six months ended August 31, 2022, have been reflected as discontinued operations in the consolidated statements of operations and consist of the following (in thousands):
|  | Three Months Ended |  |  |  | Six Months Ended
|  |  | August 31, 2022 |  |  |  | August 31, 2022
Sales |  |  | $ | 106,660 |  |  |  |  | $ | 213,924 |
Cost of sales |  |  | 84,826 |  |  |  |  | 167,686 |
Gross margin |  |  | 21,834 |  |  |  |  | 46,238 |
Selling, general and administrative |  |  | 9,710 |  |  |  |  | 22,114 |
Loss on disposal of discontinued operations |  |  | 114,900 |  |  |  |  | 114,900 |
Operating loss from discontinued operations |  |  | (102,776) |  |  |  |  | (90,776) |
Interest expense |  |  | 5 |  |  |  |  | 6 |
Other (income) expense, net |  |  | 3,443 |  |  |  |  | 4,268 |
Loss from discontinued operations before income tax |  |  | (106,224) |  |  |  |  | (95,050) |
Income tax benefit |  |  | (23,534) |  |  |  |  | (21,072) |
Net loss from discontinued operations |  |  | $ | (82,690) |  |  |  |  | $ | (73,978) |
Loss per common share from discontinued operations: |  |  |  |  |  |  |
Basic loss per share |  |  | $ | (3.33) |  |  |  |  | $ | (2.99) |
Diluted loss per share |  |  | $ | (2.85) |  |  |  |  | $ | (2.70) |
The depreciation, amortization, capital expenditures, and significant operating and investing non-cash items of the discontinued operations consist of the following (in thousands):
| Six Months Ended August 31, 2022
Depreciation and amortization | $ | 6,248 |
Purchase of property, plant and equipment | 2,878 |
Loss on discontinued operations | (114,900) |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//360/tableOfContent + Details
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