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Investments in Unconsolidated Affiliates | 6 Months Ended
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Nov. 30, 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 and included the following at November 30, 2023: Clarkwestern Dietrich Building Systems LLC (“ClarkDietrich”) (25%); Serviacero Planos, S. de R. L. de C.V. (“Serviacero Worthington”) (50%); Taxi Workhorse Holdings, LLC (“Workhorse”) (20%); and Worthington Armstrong Venture (“WAVE”) (50%). We also held a 50% noncontrolling equity interest in ArtiFlex Manufacturing, LLC (“ArtiFlex”), through August 3, 2022, when it was purchased by the unrelated joint venture partner. In connection with this transaction, we received net cash proceeds of approximately $36,095 and realized a pre-tax loss of $15,759 within equity income, representing the amount by which the book value of our investment exceeded the net cash proceeds. During the second quarter of fiscal 2024, we recognized a pre-tax gain of $2,780 within equity income, representing our portion of the overall gain realized in connection with the sale of Workhorse’s operations in Brazil. We received distributions from unconsolidated affiliates totaling $104,008 during the six months ended November 30, 2023. We have received cumulative distributions from WAVE in excess of our investment balance amounting to $118,465 and $117,297, respectively, at November 30, 2023 and May 31, 2023, which are presented separately within long-term liabilities in 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 the investment balance 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 negative investment balance classified as a liability as income immediately. We use the “cumulative earnings” approach for determining cash flow presentation of distributions from our unconsolidated joint ventures. Distributions received are included in our consolidated statements of cash flows as operating activities, unless the cumulative distributions exceed our portion of the cumulative equity in the net earnings of the joint venture, in which case the excess distributions are deemed to be returns of the investment and are classified as investing activities in our consolidated statements of cash flows. During the second quarter of fiscal 2024, we classified $1,085 of dividends received from WAVE as an investing activity. The following tables summarize combined financial information for our unconsolidated affiliates as of the dates, and for the periods presented:
| November 30, |  |  | May 31, |
(In thousands) | 2023 |  |  | 2023 |
Cash and cash equivalents | $ | 37,728 |  |  | $ | 49,185 |
Other current assets |  | 871,945 |  |  |  | 899,913 |
Noncurrent assets |  | 372,258 |  |  |  | 394,468 |
Total assets | $ | 1,281,931 |  |  | $ | 1,343,566 |
Current liabilities |  | 282,320 |  |  |  | 247,796 |
Current maturities of long-term debt |  | - |  |  |  | 36,936 |
Long-term debt |  | 349,323 |  |  |  | 349,215 |
Other noncurrent liabilities |  | 138,566 |  |  |  | 144,649 |
Equity |  | 511,722 |  |  |  | 564,970 |
Total liabilities and equity | $ | 1,281,931 |  |  | $ | 1,343,566 |
| Three Months Ended |  | Six Months Ended |
| November 30, |  | November 30, |
(In thousands) | 2023 |  |  | 2022 |  | 2023 |  |  | 2022 |
Net sales | $ | 676,875 |  |  | $ | 711,665 |  | $ | 1,397,308 |  |  | $ | 1,535,607 |
Gross margin |  | 166,939 |  |  |  | 147,299 |  |  | 361,247 |  |  |  | 328,704 |
Operating income |  | 134,120 |  |  |  | 107,356 |  |  | 283,529 |  |  |  | 245,183 |
Depreciation and amortization |  | 8,303 |  |  |  | 6,864 |  |  | 16,946 |  |  |  | 15,052 |
Interest expense |  | 4,538 |  |  |  | 3,910 |  |  | 10,277 |  |  |  | 6,590 |
Income tax expense |  | 6,708 |  |  |  | 1,262 |  |  | 8,354 |  |  |  | 3,372 |
Net earnings |  | 122,670 |  |  |  | 105,183 |  |  | 266,236 |  |  |  | 238,421 |

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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 -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (a)(3) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481687/323-10-50-3 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481687/323-10-50-3 Reference 3: http://www.xbrl.org/2003/role/recommendedDisclosureRef -Topic 323 -SubTopic 740 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481543/323-740-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 323 -Publisher FASB -URI https://asc.fasb.org//323/tableOfContent + Details
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