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Derivatives and Fair Value
 3 Months Ended
Aug. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Fair Value

10. DERIVATIVES AND FAIR VALUE

Derivatives

We operate globally and are exposed to market risks arising from fluctuations in foreign currency exchange rates and interest rates. As part of our financial risk management strategy, we use derivative financial instruments to hedge exposure to variability in cash flows associated with these market risks. These instruments are used solely for risk management purposes; We do not engage in derivative transactions for trading or speculative purposes.

Derivatives Not Designated as Hedging Instruments

We have entered into non-designated foreign currency forward contracts to manage foreign currency balance sheet risk associated with intercompany loans and other foreign currency denominated assets and liabilities. These contracts are recorded net at fair value on our consolidated balance sheets, classified as Level 2 in the fair value hierarchy. The notional amount of forward contracts in place was $50,911 and $65,023 as of August 31, 2025 and May 31, 2025, respectively, and consisted of economic hedges of transactions up to October 2025.

 

 

 

 

 

 

 

 

 

 

Fair Value of Derivatives Not Designated as Hedging Instruments

 

Balance Sheet Location

 

August 31, 2025

 

 

May 31, 2025

 

Foreign currency forward contracts, net

 

Other current assets (liabilities)

 

$

123

 

 

$

(407

)

The location and amount of gains (losses) from derivatives not designated as hedging instruments in our condensed consolidated statements of operations were as follows:

 

 

 

Three months ended August 31,

 

Derivatives Not Designated as Hedging Instruments

 

Location in statements of operations

 

2025

 

 

2024

 

Foreign currency forward contracts

 

Other, net

 

$

133

 

 

$

634

 

 

Derivatives Designated as Hedging Instruments

In November 2022, we entered into a receive-variable, pay-fixed interest rate swap agreement with a $250,000 notional value, which is designated as a cash flow hedge. In accordance with the agreement, the notional value decreased to $200,000 in November 2024. This agreement fixed a portion of the variable interest due on our term loan facility, with an effective date of December 2, 2022 and a maturity date of June 30, 2027. Under the terms of the agreement, we pay a fixed interest rate of 4.215%, plus an applicable margin ranging between 137.5 to 175 basis points and receive a variable rate of interest based on term SOFR from the counterparty, which is reset according to the duration of the SOFR term. We expect to reclassify a $580 loss of accumulated other comprehensive income into earnings in the next 12 months.

We record the fair value of our interest rate swaps on a recurring basis using Level 2 observable market inputs for similar assets or liabilities in active markets.

 

Fair Value of Derivatives Designated as Hedging Instruments

 

Balance Sheet Location

 

August 31, 2025

 

 

May 31, 2025

 

Interest rate swap – current

 

Other current liabilities

 

$

(764

)

 

$

(369

)

Interest rate swap – non-current

 

Other non-current liabilities

 

$

(1,426

)

 

$

(1,290

)

 

Fair Value of Financial Instruments

Fair value measurements are determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs. We utilize a fair value hierarchy based upon the observability of inputs used in valuation techniques as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The carrying amounts of our financial instruments other than cash equivalents and marketable securities, which include accounts receivable and accounts payable, approximate fair value based on either their short maturity or current terms for similar instruments.