Acquisition, Restructuring and Other Items, Net

3 Months Ended

Aug. 31, 2024

Restructuring and Related Activities [Abstract]

Acquisition, Restructuring and Other Items, Net

ACQUISITION, RESTRUCTURING, AND OTHER ITEMS, NET

Acquisition, Restructuring and Other Items

Acquisition, restructuring and other items, net, consisted of:


	Three Months Ended
(in thousands)	Aug 31, 2024		Aug 31, 2023
Legal (1)	$	507	$	1,817


Plant closure (2)	3,589		—

Transition service agreement (3)	(507)		(145)
Manufacturing relocation (4)	—		587

Other	722		953
Total	$	4,311	$	3,212

(1) Legal expenses related to litigation that is outside the normal course of business.

(2) Plant closure expense, related to the restructuring of our manufacturing footprint which was announced on January 5, 2024.

(3) Transition services agreements that were entered into with Merit and Spectrum.

(4) Expenses to relocate certain manufacturing lines out of Queensbury, NY.

Restructuring

The Company evaluates its performance and looks for opportunities to improve the overall operations of the Company on an ongoing basis. As a result of this evaluation, certain restructuring initiatives are taken to enhance the Company’s overall operations. On January 5, 2024, the Company announced a restructuring of its manufacturing footprint and a shift to an outsourced model (the "Plan"). This Plan will transfer all product manufacturing processes to third-party manufacturers. The restructuring activities associated with the Plan are expected to be completed in the third quarter of fiscal year 2026.

The following table provides a summary of our estimated costs associated with the plan:


Type of cost	Total estimated amount expected to be incurred (in thousands)
Facilities closeout fees (1)	$	14,500	to	$	15,250
Termination benefits	9,000		to	10,000
Outside consultants	9,000		to	10,000
Validation expenses	4,500		to	5,500
Regulatory filings	750		to	1,250
Other	750		to	1,250
	$	38,500	to	$	43,250

(1) Included in this estimate is approximately $13.6 million of non-cash charges for accelerated depreciation and building impairment.

The Company recorded restructuring charges related to the plan during the three months ended August 31, 2024 of $3.6 million. Total restructuring charges recorded to date are $13.1 million. Termination benefits are only earned if an employee stays until their termination date; therefore, the expenses related to termination benefits are being recorded ratably over the service period.

The table below presents the restructuring reserve for the three months ended August 31, 2024:


	Three Months Ended Aug 31, 2024
	Termination Benefits		Outside Consultants		Validation Expenses		Facilities Closeout Fees		Regulatory Filings		Other		Total
(in thousands)
Balance at May 31, 2024	$	568	$	1,153	$	373	$	—	$	6	$	20	$	2,120
Charges	287		994		696		1,269		13		330		3,589
Non-cash adjustments	—		—		—		(1,269)		—		—		(1,269)
Cash payments	—		(1,153)		(387)		—		(19)		(276)		(1,835)
Balance at August 31, 2024	$	855	$	994	$	682	$	—	$	—	$	74	$	2,605