Debt and Receivables Securitization

12 Months Ended

May 31, 2023

Debt Disclosure [Abstract]

Debt and Receivables Securitization

Note I – Debt and Receivables Securitization

The following table summarizes our long-term debt and short-term borrowings outstanding at May 31, 2023 and 2022:

(In thousands)	2023			2022
Short-term borrowings	$	2,813		$	47,997
4.60% senior notes due August 10, 2024		150,000			150,000
4.55% senior notes due April 15, 2026		243,623			250,000
4.30% senior notes due August 1, 2032		200,000			200,000
1.56% Series A senior note due August 23, 2031		39,226			39,382
1.90% Series B senior notes due August 23, 2034		58,786			59,019
Other		528			795
Total debt		694,976			747,193
Unamortized discount and debt issuance costs		(2,181	)		(2,586	)
Total debt, net		692,795			744,607
Less: current maturities and short-term borrowings		3,077			48,262
Total long-term debt	$	689,718		$	696,345

Maturities of long-term debt and short-term borrowings in the next five fiscal years, and the remaining years thereafter, are as follows:

(In thousands)
2024	$	3,077
2025		150,264
2026		243,623
2027		-
2028		-
Thereafter		298,012
Total	$	694,976

Long-Term Debt

On August 23, 2019, two of our European subsidiaries issued a €36,700 principal amount unsecured 1.56% Series A Senior Note due August 23, 2031 (the “Series A Senior Note”) and €55,000 aggregate principal amount of unsecured 1.90% Series B Senior Notes due August 23, 2034 (the “Series B Senior Notes” and collectively with the Series A Senior Note, the “Senior Notes”). The Series A Senior Note is to be repaid in the principal amount of €30,000, together with accrued interest, on August 23, 2029, with the remaining €6,700 principal amount payable on August 23, 2031, together with accrued interest. The Series B Senior Notes are to be repaid in the aggregate principal amount of €23,300, together with accrued interest, on August 23, 2031, with the remaining €31,700 aggregate principal amount payable on August 23, 2034, together with accrued interest. Debt issuance costs of $134 were incurred in connection with the issuance of the Senior Notes and have been recorded on our consolidated balance sheets within long-term debt as a contra-liability. They will continue to be amortized, through interest expense, in our consolidated statements of earnings over the respective terms of the Senior Notes. The unamortized portion of the debt issuance costs were $96 and $106, at May 31, 2023 and 2022, respectively.

On July 28, 2017, we issued the 2032 Notes. The 2032 Notes bear interest at a rate of 4.30%. The 2032 Notes were sold to the public at 99.901% of the principal amount thereof, to yield 4.309% to maturity. We used a portion of the net proceeds from the offering to repay amounts then outstanding under our then current revolving credit facility and a prior revolving trade accounts receivable securitization facility. We entered into an interest rate swap in June 2017, in anticipation of the issuance of the 2032 Notes. The interest rate swap had a notional amount of $150,000 to hedge the risk of changes in the semi-annual interest rate payments attributable to changes in the benchmark interest rate during the several days leading up to the issuance of the 2032 Notes. Upon pricing of the 2032 Notes, the derivative instrument was settled resulting in a gain of approximately $3,098, which was reflected in AOCI. Approximately $2,116 and $198 were allocated to debt issuance costs and the debt discount, respectively. The debt issuance costs and the debt discount have been recorded on our consolidated balance sheets within long-term debt as a contra-liability. Each will continue to be amortized, through interest expense, in our consolidated statements of earnings over the term of the 2032 Notes. The unamortized portions of the debt issuance costs and the debt discount were $1,293 and $121, respectively, at May 31, 2023 and $1,434 and $134, respectively, at May 31, 2022.

On April 15, 2014, we issued the 2026 Notes. The 2026 Notes bear interest at a rate of 4.55%. The 2026 Notes were sold to the public at 99.789% of the principal amount thereof, to yield 4.573% to maturity. We used a portion of the net proceeds from the offering to repay amounts then outstanding under our then current revolving credit facility. Approximately $3,081, $2,279 and $528 were allocated to the settlement of a derivative contract entered into in anticipation of the issuance of the 2026 Notes, debt issuance costs, and the debt discount, respectively. The debt issuance costs and the debt discount have been recorded on our consolidated balance sheets within long-term debt as a contra-liability, and the loss on the derivative contract recorded within AOCI. Each will continue to be amortized, through interest expense, in our consolidated statements of earnings over the term of the 2026 Notes. The unamortized portions of the debt issuance costs and the debt discount were $538 and $125, respectively, at May 31, 2023 and $728 and $169, respectively, at May 31, 2022.

During fiscal 2023, we repurchased $6,377 of the 2026 Notes through open market purchases. The repurchase activity generated a gain of $86, which is recorded in miscellaneous income (expense), net in our consolidated statement of earnings. On July 28, 2023, we redeemed in full the 2026 Notes. See “Note V – Subsequent Events” for additional information.

On August 10, 2012, we issued $150,000 aggregate principal amount of unsecured senior notes due August 10, 2024 (the “2024 Notes”). The 2024 Notes bear interest at a rate of 4.60%. The net proceeds from this issuance were used to repay a portion of the then-outstanding amounts. Approximately $80 of the aggregate proceeds were allocated to debt issuance costs. The unamortized portion of the debt issuance costs was $8 and $15 at May 31, 2023 and 2022, respectively.

Other Financing Arrangements

On May 19, 2022, we entered into the AR Facility. Pursuant to the terms of the AR Facility, certain of our subsidiaries were to sell or contribute all of their eligible accounts receivable and other related assets without recourse, on a revolving basis, to WRC, a wholly-owned, consolidated, bankruptcy-remote indirect subsidiary. In turn, WRC was to sell, on a revolving basis, up to $175,000 of undivided ownership interests in this pool of accounts receivable to a third-party bank. We were to retain an undivided interest in this pool and were to be subject to risk of loss based on the collectability of the receivables from this retained interest. Because the amount eligible to be sold was to exclude receivables more than 120 days past due, receivables offset by an allowance for doubtful accounts due to bankruptcy or other cause, concentrations over certain limits with specific customers and certain reserve amounts, we believed additional risk of loss would be minimal. As of May 31, 2023, there were no borrowings outstanding under the AR Facility, leaving $175,000 then available for use. Fees incurred to facilitate the securitization were $547 and will be deferred and amortized on a straight-line basis through May 2024. Facility fees will be expensed as incurred through interest expense in our consolidated statements of earnings.

On June 29, 2023, we terminated the AR Facility. See “Note V – Subsequent Events” for additional information.

We maintain a $500,000 multi-year revolving credit facility scheduled to mature on August 20, 2026 (the “Credit Facility”) with a group of lenders. Borrowings under the Credit Facility have maturities of up to one year. We have the option to borrow at rates equal to an applicable margin over the Simple SOFR Rate, the Prime Rate of PNC Bank, National Association or the Overnight Bank Funding Rate. The Credit Facility was amended on May 10, 2023 to remove references to the LIBOR benchmark and replace it with SOFR. The applicable margin is determined by our credit rating. There were no borrowings outstanding under the Credit Facility at May 31, 2023, leaving $500,000 available at May 31, 2023.

Tempel Steel Company’s China location (“Tempel China”) has short-term loan facilities with the equivalent of an aggregate of $2,813 outstanding at May 31, 2023. These loans, which are used to finance steel purchases, are collateralized by Tempel China property and equipment. These loans were subsequently paid off in June 2023. New loans may be entered into as these loans mature. The effective interest rate on the Tempel China loans outstanding at May 31, 2023 was 3.57%.