We are a lessee under various leases for facilities and equipment. As of May 31, 2026, we were the lessee for 161 operating leases and 158 finance leases with terms of 12 months or more. These leases are reflected in "Right-of-use assets," "Lease liability—short-term" and "Lease liability—long-term" in our consolidated balance sheets.

Our leases are primarily for (i) operating facilities, (ii) vehicles and equipment used in operations, (iii) facilities used for back-office functions, (iv) equipment used for back-office functions, and (v) temporary storage. The majority of our vehicle and equipment leases have both a fixed and variable component.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets and we recognize lease expense for these leases on a straight-line basis over the lease term. We have a significant number of short-term leases, including month-to-month agreements. Our short-term lease agreements include expenses incurred hourly, daily, monthly and for other durations of time of one year or less. Our future lease commitments as of May 31, 2026, do not reflect all of our short-term lease commitments.

The following table outlines the classification of right-of-use ("ROU") assets and lease liabilities in the consolidated balance sheets as of May 31, 2026 and February 28, 2026 (in thousands):


		As of
		May 31, 2026		February 28, 2026
Assets	Balance Sheet Classification
Operating right-of-use assets	Right-of-use assets	$	46,190	$	46,261
Finance right-of-use assets	Right-of-use assets	$	14,734	$	13,303
Liabilities
Operating lease liabilities―short-term	Lease liability—short-term	$	5,771	$	5,413
Operating lease liabilities―long-term	Lease liability—long-term	$	41,185	$	41,489
Finance lease liabilities―short-term	Lease liability—short-term	$	3,731	$	3,266
Finance lease liabilities―long-term	Lease liability—long-term	$	11,526	$	10,480


	Three Months Ended May 31,
	2026		2025
Operating cash flows from operating leases included in lease liabilities	$	2,006	$	1,881
Lease liabilities obtained from new ROU assets—operating leases	$	1,376	$	16
Decrease in ROU assets related to lease terminations	$	—	$	(467)
Operating cash flows from finance leases included in lease liabilities	$	239	$	142
Financing cash flows from finance leases included in lease liabilities	$	872	$	434
Lease liabilities obtained from new ROU assets—finance leases	$	2,392	$	4,127


	As of
	May 31, 2026		February 28, 2026
Weighted-average remaining lease term—operating leases	14.46 years		14.71 years
Weighted-average discount rate—operating leases	6.11	%	6.10	%
Weighted-average remaining lease term—finance leases	3.93 years		4.01 years
Weighted-average discount rate—finance leases	6.47	%	6.59	%

The following table outlines our lease expense in the consolidated statements of operations as of May 31, 2026 and May 31, 2025 (in thousands):


	Three Months Ended May 31,
	2026		2025
Operating lease expense:
Cost of sales	$	1,886	$	1,829
Selling, general and administrative	500		508
Total operating lease expense	2,386		2,337
Financing lease expense:
Cost of sales	952		487
Interest expense	239		142
Total financing lease expense	1,191		629
Variable lease expense:
Cost of sales	258		249

Total variable lease expense	258		249
Short-term lease expense:
Cost of sales	1,906		1,802
Selling, general and administrative	35		5
Total short-term lease expense	1,941		1,807
Total lease expense	$	5,776	$	5,022


Fiscal year:	Operating Leases		Finance Leases		Total
2027	$	6,408	$	3,450	$	9,858
2028	7,584		4,508		12,092
2029	6,784		4,275		11,059
2030	4,724		3,574		8,298
2031	3,820		1,312		5,132
2032	3,095		58		3,153
Thereafter	41,623		37		41,660
Total lease payments	74,038		17,214		91,252
Less imputed interest	(27,082)		(1,957)		(29,039)
Total	$	46,956	$	15,257	$	62,213

We sublease multiple buildings in Columbia, South Carolina to multiple subtenants. The Columbia sublease agreements are by and between AZZ Precoat Metals and multiple subtenants. Sublease income is recognized over the term of the sublease on a straight-line basis and is reported in the consolidated statement of operations as a reduction to "Cost of sales." Sublease income for the three months ended May 31, 2026 and 2025 was as follows (in thousands):