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Investments in Unconsolidated Affiliates | 12 Months Ended
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May 31, 2023
Equity Method Investments and Joint Ventures [Abstract] |
Investments in Unconsolidated Affiliates | Note D – Investments in Unconsolidated Affiliates Investments in affiliated companies that we do not control, either through majority ownership or otherwise, are accounted for using the equity method. At May 31, 2023, we held investments in the following affiliated companies: ClarkDietrich (25%), Serviacero Worthington (50%), WAVE (50%), and Workhorse (20%). On August 3, 2022, we sold our 50% noncontrolling equity interest in ArtiFlex to the unaffiliated joint venture member for net proceeds of approximately $35,795, after adjustments for closing debt and final net working capital, resulting in a pre-tax loss of $16,059 within equity income during fiscal 2023. In a separate but concurrent transaction with the joint venture member, we sold real property with a net book value of $6,300. This real property was owned by us and leased to ArtiFlex prior to closing of the transaction. We received distributions from unconsolidated affiliates totaling $240,857, $100,058, and $91,007 in fiscal 2023, fiscal 2022 and fiscal 2021, respectively. We have received cumulative distributions from WAVE in excess of our investment balance, which resulted in a negative asset balance of $117,297 and $81,149 at May 31, 2023 and 2022, respectively. In accordance with the applicable accounting guidance, we reclassified the negative balances to other liabilities within our consolidated balance sheets. We will continue to record our equity in the net income of WAVE as a debit to the investment account, and if it becomes positive, it will again be shown as an asset on our consolidated balance sheets. If it becomes probable that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will recognize any balance classified as a liability as income immediately. The following table presents combined information regarding the financial position of our unconsolidated affiliates accounted for using the equity method as of May 31:
(In thousands) | 2023 |  |  | 2022 |
Cash and cash equivalents | $ | 49,185 |  |  | $ | 68,563 |
Other current assets |  | 899,913 |  |  |  | 1,148,029 |
Noncurrent assets |  | 394,468 |  |  |  | 369,608 |
Total assets (1) | $ | 1,343,566 |  |  | $ | 1,586,200 |
Current liabilities | $ | 247,796 |  |  | $ | 345,097 |
Short-term borrowings |  | - |  |  |  | 5,943 |
Current maturities of long-term debt |  | 36,936 |  |  |  | 33,054 |
Long-term debt |  | 349,215 |  |  |  | 306,814 |
Other noncurrent liabilities |  | 144,649 |  |  |  | 76,437 |
Equity |  | 564,970 |  |  |  | 818,855 |
Total liabilities and equity (1) | $ | 1,343,566 |  |  | $ | 1,586,200 |
(1) Effective January 1, 2022, Workhorse adopted Topic 842 using the alternative transition method. As a result of the adoption, Workhorse recognized operating lease ROU assets of $47,082 and lease liabilities of $47,082. The adoption resulted in a cumulative-effect adjustment of $18,000 related to a prior sale lease-back transaction recognized under Accounting Standards Codification Topic 840. Our portion of this cumulative effect adjustment was $3,600 and is recognized in retained earnings on our consolidated balance sheet as of May 31, 2023. The impact of adopting ASC 842 did not have a significant impact on the financial statements of our other unconsolidated affiliates. The following tables presents summarized financial information for our unconsolidated affiliates as of, and for the fiscal years ended May 31.
(In thousands) | 2023 |  |  | 2022 |  |  | 2021 |
Net sales |  |  |  |  |  |  |  |
WAVE | $ | 447,369 |  |  | $ | 452,368 |  |  | $ | 371,814 |
ClarkDietrich |  | 1,451,665 |  |  |  | 1,695,808 |  |  |  | 893,371 |
Serviacero Worthington |  | 564,569 |  |  |  | 620,312 |  |  |  | 311,543 |
ArtiFlex (1) |  | 52,641 |  |  |  | 187,089 |  |  |  | 144,834 |
Workhorse |  | 364,396 |  |  |  | 313,265 |  |  |  | 196,915 |
Total net sales | $ | 2,880,640 |  |  | $ | 3,268,842 |  |  | $ | 1,918,477 |
(In thousands) | 2023 |  |  | 2022 |  |  | 2021 |
Gross margin |  |  |  |  |  |  |  |
WAVE | $ | 242,257 |  |  | $ | 238,523 |  |  | $ | 215,692 |
ClarkDietrich |  | 403,569 |  |  |  | 431,070 |  |  |  | 158,074 |
Serviacero Worthington |  | 21,503 |  |  |  | 96,918 |  |  |  | 51,253 |
ArtiFlex (1) |  | 8,589 |  |  |  | 30,633 |  |  |  | 20,596 |
Workhorse |  | 17,628 |  |  |  | 11,455 |  |  |  | (7,057 | )
Total gross margin | $ | 693,546 |  |  | $ | 808,599 |  |  | $ | 438,558 |
(In thousands) | 2023 |  |  | 2022 |  |  | 2021 |
Operating income (loss) |  |  |  |  |  |  |  |
WAVE | $ | 184,882 |  |  | $ | 183,545 |  |  | $ | 165,381 |
ClarkDietrich |  | 318,914 |  |  |  | 351,583 |  |  |  | 94,888 |
Serviacero Worthington |  | 10,387 |  |  |  | 87,342 |  |  |  | 43,075 |
ArtiFlex (1) |  | 4,911 |  |  |  | 15,778 |  |  |  | 9,628 |
Workhorse |  | 7,507 |  |  |  | (2,024 | ) |  |  | (2,372 | )
Total operating income | $ | 526,601 |  |  | $ | 636,224 |  |  | $ | 310,600 |
(In thousands) | 2023 |  |  | 2022 |  |  | 2021 |
Depreciation and amortization |  |  |  |  |  |  |  |
WAVE | $ | 4,679 |  |  | $ | 4,554 |  |  | $ | 4,073 |
ClarkDietrich |  | 13,717 |  |  |  | 10,946 |  |  |  | 11,917 |
Serviacero Worthington |  | 4,030 |  |  |  | 4,300 |  |  |  | 4,305 |
ArtiFlex (1) |  | 1,444 |  |  |  | 5,708 |  |  |  | 5,728 |
Workhorse |  | 10,386 |  |  |  | 6,586 |  |  |  | 8,965 |
Total depreciation and amortization | $ | 34,256 |  |  | $ | 32,094 |  |  | $ | 34,988 |
(In thousands) | 2023 |  |  | 2022 |  |  | 2021 |
Interest expense |  |  |  |  |  |  |  |
WAVE | $ | 13,024 |  |  | $ | 8,386 |  |  | $ | 8,909 |
ClarkDietrich |  | 524 |  |  |  | 308 |  |  |  | 101 |
Serviacero Worthington |  | 329 |  |  |  | 180 |  |  |  | 42 |
ArtiFlex (1) |  | 134 |  |  |  | 340 |  |  |  | 528 |
Workhorse |  | 2,507 |  |  |  | 1,228 |  |  |  | 2,704 |
Total interest expense | $ | 16,518 |  |  | $ | 10,442 |  |  | $ | 12,284 |
(In thousands) | 2023 |  |  | 2022 |  |  | 2021 |
Income tax expense (benefit) |  |  |  |  |  |  |  |
WAVE | $ | 222 |  |  | $ | 158 |  |  | $ | 200 |
ClarkDietrich |  | 1,924 |  |  |  | - |  |  |  | - |
Serviacero Worthington |  | (2,996 | ) |  |  | 25,079 |  |  |  | 11,341 |
ArtiFlex (1) |  | 59 |  |  |  | 258 |  |  |  | 149 |
Workhorse |  | 1,802 |  |  |  | 1,244 |  |  |  | 270 |
Total income tax expense | $ | 1,011 |  |  | $ | 26,739 |  |  | $ | 11,960 |
(In thousands) | 2023 |  |  | 2022 |  |  | 2021 |
Net earnings (loss) |  |  |  |  |  |  |  |
WAVE | $ | 171,687 |  |  | $ | 175,154 |  |  | $ | 156,869 |
ClarkDietrich |  | 321,977 |  |  |  | 356,288 |  |  |  | 98,313 |
Serviacero Worthington |  | 15,451 |  |  |  | 59,565 |  |  |  | 31,865 |
ArtiFlex (1) |  | 4,717 |  |  |  | 15,180 |  |  |  | 8,950 |
Workhorse |  | 2,673 |  |  |  | (1,170 | ) |  |  | (2,811 | )
Total net earnings | $ | 516,505 |  |  | $ | 605,017 |  |  | $ | 293,186 |
(1) On August 3, 2022, we sold our 50% noncontrolling equity interest in ArtiFlex. At May 31, 2023 and 2022, $109,703 and $132,283, respectively, of our consolidated retained earnings represented undistributed earnings of our unconsolidated affiliates, net of tax.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI https://asc.fasb.org/topic&trid=2196965 + Details
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